communities that are hurting. in more systematic and more unified ways if it's going to succeed. >> i want to continue that a little bit and clarify what i think one of the main issues here is. you said that occupy challenged the poverty of creativity around governance and society in general. we are not -- i think and i speak for myself, but we if my tight circle of friend and perhaps occupy at large, when we demonize romney or obama, we're not talking about a person who haphazardly made his way into the presidential arena. we're talking about a system that is only controlled by certain types of people and only promotes certain types of people. the structure, it is all corrupt, very fundamentally and at very many levels from top to bottom.

when we talk about organizing a around a singular principal, i don't think the solution is necessarily to consolidate around existing labor movements. it is not necessarily to formulate a third party platform. the solution is to use these tools and use these bodies in order to consolidate power and to use that power to challenge the way in which decisions are made fundamentally. >> i would like to have time for questions from the audience. please go to one of the of mikes so it can be sure to hear you. i will alternate between mikes as long as we have people at them. >> do you think cooperation does not work in this country because people do not know what it

means? non-cooperation, civil disobedience. >> and if not, why not? >> in this country. i believe it should work, that is the only way to help in this country, but it does not really work. >> it works, if you get the numbers. the important thing is about building numbers. and sustaining it. but it certainly works. worked in the labor movement. the problem is it destroyed all of the radical movements. i will have to disagree with you on labor. labor is a spent force in this

country. look at the chicago teachers strike. that had to break with the traditional democratic established as embodied by rahm emanuel and barack obama and stepped outside those mechanisms of power to respond. labor is fighting a rearguard action. in order for the bailout to go through, uaw had to accept a decline in salaries for older workers from about $76 an hour to $50 and had to agree the new plans to hire workers at $14 an hour and had to agree that they would not strike. if it struck, all of the bailout money would have to be repaid. while the democratic establishment holds up the sagging auto industry, what is the unspoken -- against labor to protect the working class.

>> i am a member of occupied boston. i work with that gentleman a good deal, making noise in the streets. the first comment is, a huge percentage of occupied is indeed minority. a great portion of our effectiveness is that we are not outsiders, we are on the side of the people in the streets, the locals. it is not outsiders coming in, it is the people themselves. we are helping each other. that is just a comment. my main concern is twofold. i have a virtual daughter, she is 27. she has all the bad aspects of a girl who lived her life wrong. her eldest daughter is 10. she is single, living on the barest minimum of section 8, etc.

she does not have even one year or 10 years. she needs help now. i voted for obama. it allowed her to maintain her support she would have lost under romney. i main objective right now is that we spent all this time, we are great people, we are talking to ourselves. we are not the ones we need to talk to. we need to talk to the almost half of america who voted against their own best interest repeatedly. i was down in immokalee to talk to people to understand what was going on and talk to people who are republicans, who view the world differently, and to get them to look at their own best interests. and ask the question, what do they want their own world to be? my question is, how do we get to

those people? >> i tend to think, as i said, there is a layer of low hanging fruit that is extremely appealing to people across all constituencies and across all parties. it sounded to me like you were saying how can people on the left reach out to people on the upper right. i just think we need to reach out to both sides and appealed to people on the very rational, reasonable set of points. and to show the series of

financial bait and switch is as a business owner, the stimulus is a total joke. the stimulus package for small business has never made it to small businesses. that is one of a host of examples where it is not difficult to talk to people, to engage and educate them and remind them that the party dynamic is not positive for any of us. >> it looks like you are about to jump in. >> i was just going to say that my starting point is where people are. maybe that labor is a spent force. it may be that civil rights organizations are spent forces. maybe that community-based organizations are now reminded into anxious to just get up foundation grant or a government no income tax credit to build five units of housing, and that is not going to change the system. but that is where people are. and that is where i start. for the last four years, i have been working with the widest, most conservative part of the labor movement.

i have been working with them to try to get young black and latino kids of color into the building trades so they can become the green work force of the future. the building trades, spent as they are, conservative as they are, operate 1200 job training centers in the construction trades and it is the second-largest job-training mechanism outside of the u.s. navy. and guess what? they are actually in a coalition with youth build, with many other organizations that train high-school dropouts, inner-city kids, working together for the last four years to say, how do we change? how do we improve? the national leadership of the building trades has gone across 350 cities in the u.s., trying to convince locals at the need to change and have a new vision about how to grow a labor movement.

that is encouraging to me. we have to do that kind of work, reaching across, not writing people off. if anyone is justified in writing off people who try to keep people of color out of work, i think people like me would be justified in writing off those people. in order to change america, i need them. i want them to understand, they need me, too. i just think we need to proceed like that. we cannot proceed with somebody styria or somebody's wish for a spark to ignite folks to go on the street. i personally do not like riots. i saw what comes after riots. if you don't have a plan, if you have no capacity to run the city, you get shot, people go to jail. you win a victory that last for a little bit of time and then you lose in the end because the people who are fighting have more staying power and more capacity.

i think this is a real fight, not one i want to lose. not one i want to see our committees lose. i think the stakes and the dangers are bigger than they ever were. >> i am going to ask us to not make comments but ask questions, and try to keep them short. we have little time and many people. >> given the technology have in the 21st century, and given the welt that i see that we spend on the entertainment industry, my understanding is that eradication of poverty is possible and that it is not some sort of fantasy like the eradication of crime. is the eradication of poverty in america a possibility, and what is the method for getting their, if we cannot depend on voting someone in the power to help us get there.

>> poverty rates have been going up in this country for the last two decades, but they went down, so here is a place where i actually think government policies matter. and whether people put pressure on the government, whether through mass protest or through institutions like the labor movement's or through election campaigns, policies matter, as you said. we have enough wealth in this country that there is no reason why anybody in this country should be hungry. there's no reason why anybody in this country should be poor. it is an atrocity that so many children in the united states grow up in poverty.

it is totally against the ideas that this country was founded on, that are powerful ideals that resonate with many people. what the occupy movement correctly is picking up on is, the government has not been responsive. it has been part of the problem. it has been creating policies that have made the situation for people worse, and we actually need better policies. we are not technically limited, we are politically limited. >> next question. >> in the interest of gender balance, i offered my spot to the young woman behind me, and she demurs, so here i am. i wish the entirety of this conversation or focused on the democratic party, whether it is and allied of our struggles and interest or not, and what, if

anything, might be an alternative to that politically, not just in civil disobedience. i am sympathetic to civil disobedience and speaking truth to power and challenging power. ralph nader likes to " cicero, who said freedom is participation in power. with that in mind, can have a little bit of further elaboration on political alternatives, acknowledging the difficulties and the constraints, to the established institutional democratic party, or if you don't think that is the way to go, please say so little bit more explicitly. thank you. >> i supported ralph nader. i wrote most of his policy speeches for him in 2008. i voted for joe stein in this election because i believe the

democratic party, beginning under clinton, essentially sold out for corporate money. clinton continues like obama to speak in that "i feel your pain" language, while he gave us nafta, while he deregulated the fcc, he destroyed welfare and 70% of the recipients were children. from doing the business of corporations, he got corporate money. by the 1990's, the democratic party had fund-raising parity with the republicans. when obama ran in 2008, he got more. i look at other countries like germany. the labor party in germany never pulled more than 5%, but it is a counterweight, force to protect labor.

the reason i supported ralph nader and voted green is not because i believe anyone is going to win, but ralph is right. we need to build five, 10, 15 million people who begin to put pressure on the democratic party from the other side. this policy of voting for the least worst, voting in elections were the primary emotion is fear of the other. it is fear that homosexual couples will teach your children in kindergarten, whatever wacky idea that have. romney was a corporate -- where did obamacare come from? it was first put in practice by romney in massachusetts and then it was adopted by the obama. it is a completely faux the date.

it is part of resistance, but not enough. i actually agree with your. and the work you are doing, and when i talk about a sport, high and not sitting at home watching c-span awaiting for a spark. but i think that we cannot get demoralized with numbers, and after the success of the occupy movement, i am finding a demoralization. i came out of seminary, harvard divinity school, and resistance is kind of a moral imperative. that is what king got and what malcolm got.

we were where we should be. faith is the belief that good draws the good to itself. i think that because we have this truth, we do have the capacity. i think it articulates the concerns of the mainstream and what frightened the state more than anything was seeing on the weekends, mothers and fathers from new jersey show up pushing their strollers up and down the street. >> i want to have one additional comment in response to that question and then it will be 6:00. those of you need to leave, please do so.

i thought to finish up, what we could do is just take all the questions in sequence quickly and then have some good statement by the panelists to sum things up. >> to your very important question about how to relate to the existing political parties. i completely think there is room for third parties, for opposition, for voting your conscience. i do think there is some political reforms that we do a lot. one of them is campaign finance. we have been losing over and over again on the campaign finance issue. the way that money now influences elections is completely undemocratic. we need to get those laws changed, so that is one thing, if i were trying to think about how to respond to the political process. even if we have other parties in there, we need to change the

rules of the game to make sure that everybody had the chance to influence the political process on an equal basis. and the second thing is i think we need to change the electoral college which is very biased against cities and places with big populations. >> those of you need to leave at 6:00, here is your moment. if we could make the questions short, it looks as though there are four more questioners. we could ask those questions and then go back to the panel. >> occupy has very pejorative connotations. >> i was wondering if you have advice for students in technological and technical

fields, people who see the same situation you described, agree that there's a problem, and want to help. >> there is a really good book, "republic lost." it seems to me he is addressing recovery and from the influence of money in politics. how can we do that? seems to me, as he says, it should be the second item on everybody's agenda, no matter what your issue is. so what is your response? >> why are we, all of us, so parochial?

a occupy sandy worked together with 350.org. you go to their pages, they do not have links to each other. nobody here has put occupy within the context of the wave of worldwide revolution that started with tunisia. those in spain are much closer to us than it tunisia or spain or egypt or any other place. >> you mentioned that you had been to west virginia and spoken to folks there and i have spent a lot of time in west virginia. what i see is poor white workers who shared distrust in the finance industry and the government and lots of things like that. how can occupy appeal to these voters who are socially conservative but are

traditionally democrat? >> let's start with bill and chris. >> i just wanted to say, and with a lesson i learned from my grandfather. my grandfather raised me. my grandparents raised me, and he was from a farm in north carolina. in 1968, he voted for george wallace. even as the young person in 1968, i could not understand why he was voting for george wallace. i hope folks know who george wallace was. he was leading a segregationist movement. my grandfather said both nixon and hubert humphrey were corporate guys in suits, and

they would just say whatever they think they need to say in order to get elected. but i've spent my whole life for white folks and they are lined up behind george wallace because they really believe in what george wallace has said. he said, but i think if i really talk to them and work with them, i can change them. if you change a poor white in the south, you've got a friend forever. i will never change these people in suits because they do not believe what they are saying themselves. that is how i think about this question of movement building. i don't care, democratic party. i have been left for 30 years. i don't see a big difference between whites on the left and whites on the right. i don't see it. it is really about, do you believe in what you say? are you open to real

conversation, for real engagement, for real humanity, war are you not? i don't think any party or any left-right has any monopoly or particular high ground on that issue. that is the fundamental issue. when it comes to change and movement building. >> thank you so much. phil has to leave. let's thank him as he leaves. >> i just got back from alabama, where 34% of african-american men are disenfranchised because of criminal records. i was in montgomery. there is one confederate memorial after another. the sons of confederacy have put this gargantuan confederate flag outside the city. it reminds me of the breakdown in yugoslavia where in times of economic dislocation, the war

between the states is no longer about slavery, it is about straight be the states' rights. we have huge sections of this country embodied like that nativist element, like the christian right, in mythical narrative's, whether it is creationism, or the fact that muslims are a satanic religion. you cannot rationally argue with people who think the earth was created 6000 years ago and adam-and-eve used to ride on the backs of dinosaurs. the only thing you can do is reintegrate them into the economy. that is what frightens me. when you fall to that level of desperation, and this is exactly what tore apart yugoslavia with these ethnic, nationalist identities. there becomes an inability to

communicate. a year ago we had several hundred white guys dressed in confederate uniforms margin to montgomery. half of that city is black. to carry out a re-enactment of the inauguration of jefferson davis. it cannot carry out a dialogue. that is what frightens me. we have powerful movements that celebrate the gun culture, the language of violence, that demonize the marginal and the week, whether it is african-americans, homosexuals, women, liberals. i see that breakdown occurring because of the economic disintegration, and having lived through it in places like yugoslavia, the rational argument just does not work. >> it is something i think about a great deal. i think there is great future hold for up occupied-like movements.

i can probably other it as a pejorative term question as well by saying it will probably not be called occupy when there is a broader base, long-term initiative. i hope it is a way of talking and thinking that is considered the leveraged and long term. in that vein, i think we are very likely to see as their continue to be a regular practice of public outrage all of the world and that americans hone that practice and remember something we forgot up until occupy for a long time and a lot of our major cities.

that showing up for one day and marching against iraq or iran war is not going to cut it, and that a longer term sacrifice, initiative, and participation in speaking to power is an absolutely essential american value, one that you develop along with your trade skill, your social skill and your other skills. as we begin to find individuals cultivating that dimension we will also see america join the world's struggles against corporatism and government malfeasance. >> i thought the point about the global nature of this is really important. there were occupy movements throughout the world in addition to the impetus of the revolution juror talking about that sparked a lot of this.

one of the coeditors of the boston review once wrote a piece about how a lot of people are always late to the party, about how years after the civil rights and women's rights came to say we are all for liberty, but never participated. there is a critical importance for not being late to the party. when you see opposition to grievances that are just, that you not stay on the sideline. and the opposition may not be exactly what you wanted, but the new entry into the dialogue, that is the importance of having a beginning, but i have to put on my academic hat for a second and say opposition is great and important, we need a start, we need help, but we also need analysis.

we need economics for democracy. we need visions of how things could be done better. we don't actually know the answers to lots of questions about how to organize a just economy. the more we can develop programs, not from on high, but that enter into the conversation about here is what the possibilities are. here are different ways of doing this. here is the reason why we want to change these laws. here is what would happen. the more that we do that, the better. for those who are engaged in practices of studying and thinking about things, there is a lot of work to be done in addition to joining the party. >> thank you very much. let's thank our panel. there is a reception in the back, and all of you are warmly invited to participate. national captioning institute]

[captioning performed by national captioning institute] [captions copyright >> the chief executive officer of the e.l. roth chilet company talks about the role of capitalism. and now how technology affects society. former senator chuck hagel is nominated to be defense secretary and our interview with

then-senator hagel. >> "washington journal," we'll focus on president obama's nominees to head the defense department and c.i.a., jane harman will take your questions about john brennan. we'll look at the nomination of former senator chuck hagel to be defense secretary and then frank oliveri and then the center for new american security to talk about the relations between u.s. and afghanistan. "washington journal" live on c-span at 7:00 a.m. eastern. >> i think that that minds of the founding fathers is

particularly dangerous because as i say, they were not a collective unit and presenting them as such tends to dramatically oversimplify the politics of the founding generation and comes to be used as a big batter ingram to beat people over the head which is unsound. , michael austin on what he calls the deep conservative flaws. he shares his views with david on book tv "after words" on c-span 2. >> a discussion on the role of capitalism by the chief executive. this this event is on the world

outlook. >> it is my pleasure to welcome the chief executive of e.l. rothschild to join me for our discussion about capitalism in the world in 2013. apart from being chief executive of e. l. rothschild, you are also co-chair of the henry jackson initiative. that is where we are going to start. first of all, why increasing capital? that implies there is a problem with exclusive capital in the first place. >> i want to first thank you for including eric schmidt

tonight. their combined ages younger than i am, thank you. eric makes me feel more comfortable. i appreciate that. then henry jackson initiative on inclusive capitalism is a transatlantic, private, bipartisan group that got concerned about the feeling that maybe most people -- that too many people were thinking that capitalism was collusive capitalism. those of us who were born in the 1950's or 1960's, and there are not many of us in this room tonight, we grew up believing

that we could work hard, play by the rules, and anything was possible. it was called the american dream. george carlin recently said it is called the american dream because you have to be asleep to believe it. we actually think that it is very important to acknowledge that capitalism has been planned economies as the way to move people out of poverty and improve lives. 700 million people since 1980 have been lifted out of poverty, largely through one sort of capitalism or another. but at the same time, we have to admit that capitalism in the anglo-american sense has gone off the rails a bit.

for us, exhibit a of that is the inequality rate. since the 1980's, when i graduated from law school and enter the work force, my dad worked two jobs and put four children through college and law school and said this is america, you can do whatever you want. i had that experience. since 1980, the top 1% have had an increase in their income of 275%. during the same time, the middle-class, the 60% in the middle, have had an increase of 40%, and the lowest of 18%. at the same time, in 1980, when i entered the work force, the

average ceo was making 40 times the average worker. now the average ceo is making 380 times the average worker. i think the best metaphor i have seen for our problem, which i consider the inequality being one of the most important issues facing this country as well as britain, but larry katz at harvard has the right metaphor for what we are seeing. he talks about american capitalism as the apartment block that was the envy of the world 30 years ago. everyone wanted to copy what that was. today, that apartment block has really nice apartments, dated at the top. the middle apartments are crowded and damp. the lower apartments are under

water, but the worst part is that the elevator is broken. it is fixing to the elevator that the henry jackson group is about. >> are you you essentially saying that the occupy movement was right in its broad focus on these issues, on the 1% and even 1% of 1%, where it the distribution is even more skewed? >> i think that fundamentally, we are the 99%, is correct. that is why we born to the initiative, because we are not politicians, but we are the private sector. we believe that there are things that companies and individuals can do, and that is what we can talk about, to increase the

possibility for people to benefit, for more people to benefit from our capitalism. >> your co-chair is domenic barden. he has an interesting article about addressing the issue of youth unemployment, which is one of the things that has gone wrong, the young people do not have opportunities. is that part of the escalator, starting right at the bottom with young people getting on to the latter in the first place? >> what we decided to do was not to be a think tank and not to advise government, but to say, what are the things we can do? his article is very interesting. there are 3 million jobs today in america that cannot be filled because we don't have the skills for them. mackenzie interviewed companies

and 40% of them said they have jobs to offer, but they cannot find skilled workers. they predict by 2020 around the world there will be 85 million high and medium level jobs that will not have people with the right skills. the point is, what should business do and what is business doing? business should be creating apprenticeships. business opportunities for entry-level people, not as part of philanthropy, but because they know that in order to survive for the long term, they need to create opportunities. rolls-royce for instance. for 20 years that had the rolls-royce academy, where they pay people for their first two years to only be an

apprentice. that are not going to school for two years and being paid. they go through all of the divisions of rolls-royce, and then they either make it or they don't, but right now, 40% of top management had gone through that apprenticeship program. rolls royce 20 years ago realized they needed to train people for the jobs they had to offer. british gas has done a similar kind of thing. but we have jobs in this country, but we have a skills gap. one of the things the initiative talks about and continues to showcase other companies that do work in this area is how to train people for the jobs that are available. >> it seems so obvious that companies would train a work force to have the skills that they actually need. why do you think it is not happening already?

>> it is definitely not happening. we had a launch of the initiative here and some people in this room or there. larry summers get a perfect example of how we are not teaching for the skills that we need. are there any surveyors in the audience? one person was able to use the trigonometry that we all study in college. none of us had to study probabilities. and yet, every day, how probable is it that we are going to go over the fiscal cliff? how probable is it that the doubt is going to go there? for a long time in this country we have not been training for

the jobs that are available. in fact you have another interesting article about what michael porter did, surveying where we stand in a comparative since in the world, and our education is below a lot of the rest of the world. >> so young people is one area of focus. a second area that you focus on is small businesses. why does that need to be a particular area of concern, and what can be done about it? >> we are highlighting what be companies can, should, and are doing for small and medium enterprises, because first of all, if you are thinking for the long term, you want to broaden your base of suppliers. we think business in its own interest should be helping small and medium enterprises.

an example of this is ibm. ibm granted through its foundation in the first instance, gave at $10 million grant to create the supplier connection. they created an internet based place where companies smaller than $50 million of revenue could apply to supply different things, from pencils and paper to widgets in courtrooms, whatever it is. ibm brought in about 20 companies that put their needs on to this website so that small and medium enterprises can

expand their businesses. small and medium enterprises account for the largest percentage of job growth in our society, but it is our obligation to encourage them and help them thrive. we'll ask eric how he felt when facebook was a small company. >> the third area that you focus on its corporate governance and what part of the issue that has been much talk about is an excessive focus on short-termism, that you think a long-term focus might arise and be more inclusive, help bring more benefits to society. >> in the way that we are saying corporations should invest for the long term by investing in

education that is needed for its future, by reaching out to small and medium enterprises. we also need the activity of the investor base to say we are going to invest in companies that think this way, that have a sustainable real-world. on our task force we have jim leach, head of ontario teachers. they make it very clear that they measure a company by its long term commitments to the entire ecosystem of its business.

the pension plan of holland does the same thing. the new have ceo's you are on board, like one from italy. it stopped giving quarterly earnings reports. he said if your interested in long-term growth, sustainability, and a company that takes care of all its stakeholders, by my shares. we think that in order to have corporations do the right thing, we need investors to do the right thing, and create a virtuous circle of inclusive capitalism. >> the overarching issue that we deal with in the report is the

issue of ethics. if people in business and finance thought about what was right and wrong, i think we would have less resistance to a war form of capitalism today. one of the things about adam smith is, 17 years before he wrote the wealth of nations, he wrote the theory of moral sentiments. he was more a moral philosopher than an economist. it was not hard for him to believe we were good. he believed we were self interested, but he believed that free markets and freedom would lead to people doing the right thing because they cared about the reaction of their peers. they cared about common values and a common future.

one of the things we have seen since the 1980's is, from greed is good to just incredible opulence beyond what anybody can really justify, that we have lost that sense. like our parents, they were the greatest generation and they sacrificed a lot for us. sometimes i feel like we are going to be the greediest generation. we don't just give people opportunities to get on the elevator. >> how do you ensure this really happens, because all the way along the time you are describing, there have been people who preached in business as well.

there has been a big rise of rhetoric about corporate responsibility. how are you translate what you have been describing into something that actually spreads on a national or even international scale? the 1% of the 1% are very strong indeed. >> they are very strong indeed. we are almost run to start a movement of individual ways we can do something to help somebody else get a leg up. i think our political system is largely to blame for what you are talking about.

>> the collusion of big business, i don't care if you are republican and democrat, if you are not sick to death of people claiming that they want a smaller government, but taking everything from a carried interest to subsidies for their industries, into their pocket, and if they don't realize or acknowledge or face the fact that they are the biggest recipients, there was a cover story on new progressivism. we are not supposed to know who wrote it, but i know who wrote it.

in that, she talked about the mortgage interest deduction, which is essentially an upper-middle-class tax break, has cost four times what we have spent on low-income housing. people who take that mortgage deduction don't really think i am getting corporate welfare, but we really are. there was saying quote by british chancellor of the exchequer. he said to group of businessmen who were coming in and saying get off my back, we got to have less regulation. he said it you want government to get off your back, then take your hand out of its pocket. >> we are going over time, but i want to ask you one question.

it is a good one that has been asked by someone at one of the tables. what is the role of women in the inclusive capitalism? thank you for asking that. it is not inclusive if you don't include half of the population. >> that is true. and again, age. when i went to law school women were about 50%. women are 50% of college and university graduates, 50% of law school, 50% of medical school. about a third or a bit more of business school. we are half of the entry-level, half of mid-level, 35% of the federal reserve board, but we are 14% of corporate boards on

the fortune 500. we are 3% of ceo's of fortune 500, 17% of congress. so they are obviously our most powerful women. i have a sort of not politically correct rule on this issue. i think women should stop whining and i think it is time that in my experience, women decide not to go often. there are obviously stereotypes against us. we can fight against it.

women can make it to the top. there is nothing in our way except ourselves. i think if we look within ourselves and we are ready to make the sacrifices that anybody has to make in order to get to the top, we can do it. i recently was with the group that received all sorts of metals coming back from afghanistan. one person in the squadron was a woman. the person interviewing the soldier said how do you feel about having a woman as your commander? the soldier said, actually, it does not occur to us. we just think of her as a soldier. i think that we can push ahead and we can make it. >> as you know, in europe, this

is a very live issue at the european level, moose to have quotas of women at the board room level. i take it from what you are saying you are against quotas of that sort. >> quotas are really an uncomfortable thing for americans. you europeans are more comfortable. we want equality of opportunity rather than quality of results. that being said, i was on a fortune 500 corporate board pretty early in my career because -- i know for sure that the ceo of that company decided that he wanted obama and and that is why he found me. how do we get hillary clinton?

suddenly the standard for women goes through the roof. that would be mitigated if there were a requirement that you had to have a woman. so how to get american boards to think more about women, i don't know. >> we must let people eat, so please join me in thanking lynn very much. [applause] . [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] >> more now on the world

outlook. eric schmidt discusses the effect of technology on society. this is a little more than half an hour. >> an introduction to our conversation on technology. please welcome eric schmidt, executive chairman of google. [applause] >> thank you very much. it is good to be here. >> a 12 thank you very much for stepping in -- i want to thank you very much for stepping in in such short notice. of want to ask you -- i want to ask you about how technology will change our lives and in various ways in 2013. i thought it would start small

then fanned out in gold digger. and in the publication, and the world in 2013, we mentioned in number of google initiative that might change lives. one is the idea of wearable computing. will that be seen more and more next year and beyond? >> the technology works. if you have not looked at google glass, it fits right above their normal focal plane. it can show a video and it has a camera. we have been experimenting with what it could be used for with their obvious uses for your daily lives. we never had a device that could record what you saw out laboriously.

>> how will we use it? us hopefully -- >> hopefully they will tell you you are about to trip. whenever the digital world can see with the economic world is doing, we get interesting outcomes. people working on fixing our glasses and medical applications to more interesting ones of performers who showed the audience what they see. we reviewed this at the new york fashion so. you could see the models and see what they saw as you look at them. >> that was one of the eye- catching trans. another was but the idea of a driver-less cars.

>> there is a driver, the driver is just doing something else. i have been in this thing. it is a lexus. there is a button and you take your hands off the steering wheel and the golan. it takes on average about 20 minutes for a person to stop freaking out. there are cameras in the car. for the for 20 minutes, their faces are action and they are watching the car and drive. my first 20 minutes, i am more cautious driver that our cars are. i saw traffic slowing down but nevertheless, the car did it exactly right. the ai system is deciding whether it has escape blame or to slam on the brakes. it can do it faster than you

can. >> these are experimental vehicles. we do a race, we have a private racecourse, we race priuses against each other. we have a driverless prius against a human prius and the driverless prius wins every time. just to get a sense, releasing numbers of these, over the last few years -- >> a lot of them. >> five years time -- >> we really don't know. it's important for these things to be production, they have to have two fail modes. you don't want to have mechanical systems have single point of failure. the human in a car is a single point of failure. we don't want to replicate. we want duel ways of brake controls and dual ways of steering. those are in development.

it's fun as a subject. if you know someone who has lost someone in a traffic accident in america, you understand why we're doing this. 30,000 people, we don't cover it in the news anymore, it's so common. that's a record low death rate given miles driven. we're doing better at 30,000, 10 times more than people killed on 9/11 every year. this is terrible. if we can make a significant dent on that, we should to that. >> i was talking about the internet going increasingly mobile this coming here as the year there will be more internet connected devices that are mobile rather than fixed. so this is all part of that trend in a way. this is things and devices that are on the move that are connected up.

do you see that changing fundamentally how we use technology. >> many of us lived in a model where there was network platforms, standard p.c.'s and so forth that were pretty much controlled by a single architecture or vendor in the case of the p.c. model. what we're seeing now is an explosion in different kinds of devices. whether it's mobility and so forth and so on, we don't know exactly how it will play out. what we do know are the mobile devices are quickly surpassing any fixed use, any of the macs and p.c.'s are being left in the dust. the numbers with android which is now the number one platform in mobile computing is five times larger in his current sales than the iphone, always an interesting fact for people, more than 500 million in the base, it will be a billion next year. we're turning on 1.3 million of these phones or devices every day globally.

so the scale of this in terms of reach and impact and we talk about it here, here in new york, you're lucky if the phone system works. it's an improvement in your life and new yorkers are pretty so kisted anyway. imagine this showing up in your developing village. it's really life changing. >> i want to ask you about video because what, we have a question here from somewhere anonymously, what makes a video go viral. i was wondering whether that was partly gangnam style. >> yes. psy is the record, his name is psy park, if you haven't heard this, your children have. it's the greatest dance style ever. and last week, last week he surpassed justin bieber as the most popular sort of phenomenon on the net. the video answer is even more

interesting. >> you have been caught gangnam styling, haven't you? >> let's just say he is a much better dancer than i will ever be. >> did you go viral? >> yes, unfortunately. \[laughter] >> the scope and scale of video online is much larger than people appreciate. what is the content of the internet? it turns out it's video. what's the number one source of video online? netflix. interesting. if you would have asked me 10 years ago is there any scenario where people will use the internet as an equivalent of movies, i said you are kidding me. the a terrible use of internet. i can give you a long list of why i'm right. society has proven me i am wrong.

netflix is one and youtube is number two. between the two, they occupy almost the half of the total bandwidth of the internet. you do something viral, quirky and fun. >> talking about new things, new ways that you're experimenting, you also have energy projects. again, we have an article in the world in 2013 about the extraordinary reduction in cost of solar power, for example, something similar to solar panels. >> there is a china law which is china sort of overproduces to the point of bankruptcy. that is why the panel is so low. it's close. >> do you see technology transforming our energy situation? >> although it's controversial, the fact of the matter is we should give credit to the people who invented these new forms of oil and natural gas drilling generally known as fracking, hydraulic fracking and so forth. those are resources that help us find pore of this stuff. we can have a discussion about recommendation and so forth.

it's very controversial. that has materially changed the economic structure of energy in america. if you take a look at conservation and renewables which i think is ultimately the right answer, what you see now is the automation and instrumentation of passive systems, it changes everything. it goes under the term of smart building. roughly 40% of the carbon emissions that are coming out of the u.s. are coming out of building. frankly, if you would stop heating all of the building in new york as high as you do and insulate them better, you would make a significant contribution. you think of passive insulation as the first thing. the adoption of renewables. the interesting thing about

solar, it's not even as good as wind. wind is within one cent of a kilowatt equal to coal in the current structures and that's phenomenal. let it come down its curve. there are a lot of reasons to be optimistic that automation, energy use, instrumentation of your use, so forth. anybody play with a nest thermostat. it's a thermostat that you sort of screw into your wall, it's allegedly possible for you to do this on your own. i think it's one of the great sort of christmas presents for people who are sensitive about these things. it learns what you want if temperature. it does it dynamically and it wi-fis out what it's up to. >> what is google's activity in the energy area? >> we have ultimately decided to fund a lot of this stuff rather than build it ourselves because we thought we were better off as a banker to it. i'll tell you that the level of innovation and energy is equal to the level of energy in the tech world that we normally

celebrate here. >> how does this all this relate to search in your so- called business? what is the rational for this variety of projects that you get involved in? >> google wants to be at the center of the information revolution. we want to be in a decade and 20 years and 30 years. what we're trying to do is trying to be part of what will happen. we're not always perfect and we do make mistakes.

one of the more interesting things is in kansas city we have wired up a small number of houses now and we're now beginning to seriously implement it across the city, one giga bit of ether net. you say, well, do i need one giga bit, the measured performance is 78 down and 720 up mega bits, think about how your world could change. at that point, there is no difference between your computer and the computer center that it talks to. they're literally in one room together. it allows all of the different immediate qua that we so carefully have husbanded into this group and this group and this group all go away. you can handle as many d.v.d.'s as you want, all dynamically and all real-time on this format. if this technology works and the results are fantastic, if the business works, so far it looks like it will be a very profitable business, it may be possible for us and others to wire the new world at a giga bit. that's the next step change. roughly today, an example, your average performance is on the order of 100 times less than that. >> i want to come back to the search. when you look at these initiatives, do you try also to bring them back to how they can make money for google? >> we have the luxury of not worrying about that as much because we try not to worry about these things. it's a luxury. we have the luxury of time because our core revenue engine is so strong. our success in search continues and the way to think about search is to think that search is imperfect because it gives you a lot of choices. we would like to be able to give you the one answer that is correct.

if, again, this is all voluntary and this kind of stuff, the more information that you tell us about yourself, the more accurate the results will be. the next generation of search will be much more targeted at you. in fact, we may be able to get to the point where we suggest what you may be searching for. classic example, we're in a search position, search with a you're looking for. that will be our motto. here you are in a strange city, we know you are a history buff. as you walk along the streets of new york, we tell you the history of the street. it's very easy for us to figure that out. it's very easy for us to generate those searches. you can imagine that the union of the mobile platform, the cloud computing platform, the information platform, gives us unprecedented vision into what you both are thinking about and you might want to think about as suggestions and, again, if you should opt in to that. >> it's interesting the example you take is walking about the cities. that's an example on where you are mobile.

it's no longer someone sitting at a computer and i want to know a. >> the future is mobile. we call it mobile first. here in new york city, you have the explosion of high-tech start-ups. each starts with a mobile app for an iphone and an android phone. literally, that's their first design. how is the user going to interact with my service? how are they going to experience it? >> one prediction to one can make with some confidence if the year ahead is that you will publish a book because -- >> that's right. >> you and google idea director jerry cohen are publishing a book called "the new digital age." can you give us an idea or preview on what the book is going to cover? i presume some of the things you have been talking about. >> we sat down over the last 18 months, traveled around the world and talked to people about where they thought technology was going and more importantly, how society would

adapt to it, and we came to the end of the book with a very optimistic view of this. a simple way of thinking about it, let's go back to the economist. it covers dictators, economic problems, corruption, technological innovation, health care issues and general sort of things. >> and google occasionally. >> last week. >> yes, we were on the cover and covered us as well. so let's go through each of those. how to you solve the back dictator problem? you empower the simpsons. unless the dictator is willing to some out down the internet and shoot everybody can they're getting desperate enough to do, it puts a real check and balance, even china which is certainly not an elected country, it's sensitive to public criticism if you look at the train accident, which is their version of twitter, disciplined the party chief who was in charge of building up the railways.

this guy who was seen as a god is on his way to prison because of corruption. think about the terrible things that go on in the world to people who are at the with him of the police chief or minorities or the terrible status that women are treated in much of the developing world. people have cameras. you can now anonymously report things. you can imagine a network where a bad thing is occurring. you can report it anonymously. you can have anonymous responders. you can build those kind of networks and they're in development now. the fact that everybody is connected has a large number of step functions and improvement there. think about health care. we were talking earlier in the video about 2050 about health care and people sort of snickered when the gentleman mentioned to it, the f.d.a. just approved the first pill that you can swallow that has a digital chip in it that wi-fis out what is going on in your stomach. all of us would like to know

what is going on with our nutrition, here is a simple solution, will you take this pill? yeah, you will and you will because it's your health and ultimately it will in your best interests. we did a series of seminars on somely transdermal patches which are skin thin sort of surfaces that you put on your skin and they have among other things, they use the energy of your body to power a wi-fi connection which then monitors what's going on inside your body. so all of a sudden it wi-fis out to your phone. your phone says you're in big trouble, call the doctor. the doctor calls you back, what a sock. calls, says get to the hospital right now. there are so many examples where the digitization and instrumentation of the world using the combination of the mobile devices and i bet everyone in this room has a mobile device and if i went to grab it from you, you would

think i was stealing the most important thing that you have. i'm not going to do it. they act in ways that really make a lot of sense. if we take one of those areas that we mentioned, milwaukee, and the example you gave was in some of the less democracy parts of the world where democracy is in short supply and technology can provide a check and balance and a product for accountability, what about the mature democracies. we just had an election in this country. did that teach any lessons, were there any technology lessons to be drawn from this year's election? >> it's always hard to reason from one event. the winners get to write history and the losers sort of think about the next election. there is no connection that the

obama campaign, because i was part of it, had a technology that helped elect the president. it was cloud computing, servers and targeted programs and get out the vote. so that is to say this is to governments are going to change, too. on the one hand, the governments deliver services and now we can measure them. if someone asked you give me money to donate rice to the following village. we can now check whether the rice actually got there, another check and balance on sort of the corruption nature of things. we can test the effectiveness of programs. to give you some of the more sort of worrisome examples, governments can know where people really are. they can tell what they are reporting to doing versus what they are really doing. there are the slippery slopes. i'll pick one if britain. in london, when you're walking the streets of london, you're on a camera. those cameras are protected by law. in the last five years, technology has emerged that allows face toe techs to be very

accurate. a simple rule, we have a picture of you and 13 pictures of you on the internet. with 95% of confidence, we can identify you. >> you put them there on facebook or something similar. so the fact of the matter is that you can begin to link these system and the linking has a lot of implications for how this will play out. >> as we mentioned, google and others were on the cover of "the economist" this last week. yourself, facebook, apple, amazon, how to you see that battle playing out in the year ahead? >> in the past i have called this the gang of four. i'm not sure that's such a good analysis, but i think it's roughly correct. in our industry, we have never

had four felt work escapable plt forms competing at this scale. we have always had one, i.b.m. and it's monopoly which spent 1 years in the antitrust division, i.b.m., microsoft went through the whole trial 1991 through 2000. now we have at les four. they're each run pi hopefully sharp people who% what they're doing and they'll competing and also cooperating. the reason this is relevant to you all is it's driving prices down at a rate that is phenomenal. so when you lock at an iphone 5 and android competitors and you realize what amount of computation you have and you got it for a subsidized price of $100 or $200, people say whatever, it is extraordinary. that competition which is brutal by the way is ultimately beneficial.

take a look at amazon. amazon, very controversial, roughly 50% of all of the sort of online world and a larger and larger part of the general ecommerce, extraordinarily well run, extraordinarily deep in its understanding of how to suggest things for you and incredibly convenient. take a look at facebook. if you have a billion users that use you roughly every three minutes, you can make money from them. it's not complicated. these are free platforms that are going to try it. each operates under a different set of religious rules. the analogy i would offer, let's look at apple and google for example. think of these as two countries. in the old high-tech way, one would dominate the other, the other one would disappear fairly quickly. it's much more likely that each country can has its own and its own incompatible view of the other is going to have to put up with the other and find ways to work together. in apple and google's case for example, we compete very, very hard on the mobile world but we

also are search partners. >> and new countries appear and old countries that were there that aren't member of the gang of four -- >> i'm certainly not suggesting this is the only group. there are potential fifth candidates. twitter is one that has been suggested and even netflix which i mentioned and microsoft is absent if my calculation, although they certainly wish that they were. \[laughter] >> we have some very good questions from the floor that relate to some of this. one question is how will the scrutiny offense the use of user data by companies such as google and facebook, affect their business strategies in 2013? >> so what happens with these, all of tees companies correct a lot of data.

each of them has different rules. in the first place, their behavior is largely going to be controlled by the european privacy laws. there is something called the european protectorate which is what you do with the big data analytics. a sane solution is going it to say that the data is owned by the person, not by the company or at least cannot be used without that person's permission. data has to be really anonymized. security is our job. our system has to be secure. if you trust our data to us, it can't be available to fib else physicals it's by court of law. privacy is something that is sort of up to us and you. you have to decide how much of this information you want to be sharing with other people and we need to page sure that it remains private. >> another good question from the floor, do the current heads of aol, yahoo! and facebook leave google because they saw

to rewards internally? >> in each case, they became, c.e.o.'s of important and powerful companies. that position has been occupied by larry and myself. so i think perhaps they wanted a career path that wasn't in front of them. each of them is fantastic and if you look, each of them sort of trained at google, they'll make a good showing. they certainly will. >> i wanted to ask you about antitrust. you have some limitations on what you can say on that it. that too is clearly going to be one of the big challenges mountain year ahead for all of these companies, but for google in particular? >> yes, why don't you ask your question. >> how are you preparing, planning, responding to that challenge? >> there is a couple comments about antitrust. the laws differ in europe and

the u.s. the european process is a finding at the e.u. level. we have been for investigation for it almost two years by the commissioner there and his staff. during this period, they comment from everybody and we give them literally millions of documents. we are busy negotiating with them. we don't think we violated any european laws, but we're happy to have the conversation and we're sort of now waiting on with a they decide to do. we have been negotiating back and forth and they have announced that publicly. in the united states, the law is similar but different if the way it's applied. in our indication, the government to have the federal trade commission look at this and a similar investigation is underway. there were a series of hearings. i testified at the hearings and, again, i don't see the consumer arm under section 2 and we have asked the government to come back and give us the examples of things which are violations

of law. we haven't seen that yet. we are also in negotiations with them. that's probably all i should say. what i would say is we talk to these people a lot. we're waiting on them at some level. the ideal scenario would be that we come to a mutual argument with both of these. >> thinking about that, you mentioned so many of these other initiatives that you were involved in. how do you decide where to focus, was to focus on when you are planning for 2013? you have such a huge range of things. >> you use the wrong word. you don't plan. you build a product, you build a system that innovates in 2013.

innovation comes from everywhere. if you would asked us five years ago, would we be in the driverless car business? we would say it's an interesting research idea. it's taken this long to build the lasers and other algorithms. our decisions are based on how much progress we're making in each of these initiatives. we're lucky that people are constantly suggesting new ideas and new uses of this technology which is i think one of the great things about google and one of the great things about high-tech. it's fun to work in companies where people are constantly suggesting new approaches to the problem. >> here is a very nice question from the floor which sort of combines some of the smaller video things that you are involved in with a bigger picture that you have been talking about. it talks about translation as a very fast fwroge industry globally. given that translation is key to spreading democracy and capitalism, what role will machine translation play in giving the middle class, solving middle east problems?

>> when we started this, we had a scientist who invented a new technique which is called statistical machine translation. here is how it works. if you take english and chinese, english and russian, tbhrish and arabic and you sort of put the paragraphs next to each other. one goes one way, one goes the other and the other stuff, you apply these algorithms, it can learn to translate text into any other text. i am not making this up. it is literally mainly. mathematically what it's doing, it looks for patterns, a pattern repeats and the translation is done. this translation does not use a dictionary. that's why it is so interesting. sometimes it's brute force. it doesn't have any understanding of what it is translating at all. the beauty of the statistical machine translation which is what we use is we can go from any language to any language, if a small amount of time, we'll end up with a situation

100 languages into another 100 languages for all of the content if the world. the question is how does this affect things in the middle east? it affects everything because a lot of conflicts in the world an especially wars have been created because of a lack of understanding. one of the comments would be, was that there is a large body of arabic language work that has never been translated into anything. almost none of that is online. all of a sudden if we can put all of that stuff online, sort of the notion of having a little bit of respect for each other is going to go a long way. >> another question coming up related. i'm from africa, what is google's contribution to enabling success to the internet by wi-fi? >> what we did, the african situation as usual is worse than fire else. as a society, as a global society, we got to sort of look at ourselves and think how have we allowed these terrible, terrible things to occur over

several decade. what is the story of the internet in africa? >> it is the most expensive in africa which is the poorest part of the world. how can this be? in many cases, distance, satellites and a monopoly of providers. there is no really good excuse for this. what we have done is we have built proxy caches we put in each of the countries to speed up the internet. we have been funding competitive carriers and in particular competitive fiber to that. the questioner asks with a do we know about internet with wi-fi. you have your phone and the 3 g connection, the connection that enables your phone to work is impossibly expensive. it turns out that more than half of the mobile traffic is not on the cellular providers, 3 g or 4g. it's known as wi-fi, 80211 in the reuters that people use.

it's easy to imagine free wi-fi with common connections where you can use your phone. voiceover i.p. allows you to speak over the phone on the wi- fi network and that competition will open up those markets, i think. >> we have just about come to the end of our team. i want to ask you one last question which inevitably came to mind when you were talking about the magical translation devices. will there be a magical journalism device that will make the communists -- -- make all of us redundant? >> what is interesting about technology is that we do a pretty good job of catching up to the basics. ofdon't do a very good job genius, all right. if you take a look at google news, many of you use google news, it does a pretty good job of assembling the obvious stuff.

it doesn't have a lot of insight. the role of journalists in my view is the role of insight. it will be a long time. here is an example. we had a project inside of google to write things. i suggested, by the way, you could have it write a paper and then you can have it add 7% and then another 7%. it would produce infinitely long papers. it looked at the information and assembles it. it did a pretty good job of a bad author. if you read it and have a good author, you can see the difference. this is where we are. it may be that 50 years from now, the systems will be so powerful that they can replicate the kind of special insight that journalists and reporters and people who are practitioners have, but it will be a long time before that's the case.

>> on that reassuring note, thank you. >> thank you very much. [applause] eric schmidt was at the economist world outlook forum. news outlets claim his not in north korea to secure the release -- the release of an imprisoned americans. the white house says the timing of the chip is bad, coming several weeks after a north korean long-range rocket test. in a key moment, president obama nominates chuck hagel to be defense secretary and john brennan to head the cia. in half an hour, hour 2005 interview with than senator hagel. several live events scheduled for c-span tomorrow -- the urban as to post a discussion analyzing the recent debate on the so-called fiscal cliff and what is next in the debate.

at noon eastern area at 2:00 eastern, chris christie's stay of the state address. --state of the state address. >> i enjoy the capital coverage. i started there many decades ago. also the certain committee hearings. they are very tempore -- an informative. i liked the way c-span covers and however present itself with what is happening carried a little bit of commentary, but not edited out. >> bill watches c-span on comcast. c-span, created by america's cable companies in 1979, brought to you as a public-service breyer television provider -- buy your television and provider. >> mack, president obama

nominates chuck hagel and john brennan. from the white house, this is half an hour. >> ladies and gentlemen, the president of the united states, accompanied by leon panetta, senator chuck hagel and mr. john brennan. >> as president and commander in chief, my most solemn obligation is the security of the american people. we have met that responsibility. by ending the war in iraq, a transition to afghanistan, and decimating the al qaeda core, and taking out osama bin laden. by disrupting terrorist plots, saving countless american lives. among an outstanding team i am especially grateful to leon

panetta who has lead the cia and our military. you have more than earned the right to return to civilian life. i have much more to say about his distinguished service in the days ahead. today i want to convey the eternal gratitude. thank you so much. i also want to thank michael who has earned the admiration of all of us who have worked with them across the government and here in the white house. in moments of transition he has guided the cia with a steady hand as acting director not once but twice. he is a consummate professional. everybody who works with him across agencies consider some truly to be one of our most outstanding national security team members.

on behalf of all of us, thank you for your continued service. the work of protecting our nation is never done. we still have got much to do. ending the war in afghanistan and caring for those who have borne the battle. comparing for the full range of threats from the unconventional to the conventional. including things like cyber security. within our military, a continuing to ensure our men and women can serve the country they love no matter who they love. to help meet the challenges of our times, i am proud to announce my choice for the two key members of national security. chuck hagel for secretary of defense, john brennan is

director of the cia. chuck hagel is a leader our troops deserve. he is an american patriot. he served with honor alongside his own brother. when he was hit by shrapnel his brother saved him. when his brother was injured by a mine, he risked his life to to pull him to safety. he bears the scars from battles but in our name. this would be historic. he would be the first person up enlisted rank to serve the secretary of defense. one of the few secretaries to have been wounded in war. the first vietnam veteran to leave the department.

chuck hagel will our troops the character and strength. they see one of their own. he is a champion and our troops and military family. he thought to give our veterans the benefit they deserve. as head of the u.s.o. he devoted himself to caring for our troops. having studied under the gi bill he helped lead the fight. having co chaired my and a.i.g. board he knows that our armed forces collect and lives depend on good intelligence. he recognizes that american leadership is indispensable in a dangerous world. i saw this in our travels across the middle east. he understands that america stands strongest. we stand with allies and friends.

we have to keep our military the strongest this world has ever known. most importantly, he knows war is not a distraction. he understands that sending americans to fight and lead in dirt and mud is something we only do when it is absolutely necessary. my frame of reference is set. it is geared toward the guy at the bottom and would join the fighting and dying. our troops will always know that secretary chuck hagel will be there for you. finally, he represents the bipartisan stance we need more of.

for his independence and consensus, he has earned the respect of military leaders, republicans and democrats, including me. i came to admire his courage in judgment and willingness to speak his mind even if it was not popular and defied conventional wisdom. that is the spirit i want on my team, a recognition that when it comes to the defense of our country we are not a democrat or republicans. we are americans. each of us has a responsibility. we are not by the interest of our party or president but by the interest of our people. thank you for agreeing to serve once more. when i am on the subject patriots, let me say a few words about john brennan. john brennan, the men and women

of the cia will have the leadership of one of the most respected intelligence persons, not to mentions smart and strength which he claims comes from growing up in new jersey. a 25 year veteran of the cia he knows what our national security demands, strong facts, analytic insights, the key. he traveled through the arabian peninsula where he camped with them in the desert. he has a desire for human dignity. he held senior management and operational positions at the agency.

he is committed to the capabilities we need. he literally built and led the terrorism room. he knows the risks they face every day. john has lost colleagues and friends, he rose to stars the grace the memorial wall. for the last year he developed and has overseen our counterterrorism strategy, a collaborative effort across the government. think about the results. more have been removed from the battlefield since any time since 9/11. all of which makes it harder to

plan and carry out large-scale attacks against our homeland. we will remain relentless against al qaeda and its affiliates. in all this work john has been tireless. people here in the white house work hard. john is legendary even in the white house for working hard. he is one of the hardest working public servants i have ever seen. i am not sure he has left in four years. when i was at martha's vineyard, john came and did the press briefing. he was in a false and tie in august.

one of the reporters asked him don't you ever get any downtime? he said i do not do downtime. he's not even smiling. [laughter] there is another reason why i value him so much, and his integrity and commitment to the values that define us as americans. he has worked to imbed our efforts and a strong legal framework. he understands we are a nation of loss. he asks the tough questions and he insists on a rigorous standards. time and again he is spoken to the american people about our policies because he recognizes we have a response ability to be as transparent as possible. you have been one of my closest advisers.

you have been a great friend. i'm deeply grateful for your extraordinary service. i am more grateful for kathy willing to put up for you. i am grateful to both of you for your service. today i can say to the men and women of the cia, in john brennan you have a leader he will fight for you every single day. you will have a leader that has my complete confidence and trust. the work of defending our nation is never done. my number one criteria in making these decisions was simple.

he was going to do the best job number securing american? they have dedicated their lives to protecting our country. i am confident they will do an outstanding job. i urge the senate to confirm them as soon as possible so we can keep our nation secure and the american people safe. congratulations. with that i want to invite each of these leaders on stage to say a few words starting with mr. leon panetta. >> first of all, let me express my deepest gratitude to the president for giving me the honor and the privilege of serving in your administration. the last four years as director of the cia and now secretary of defense i have been extremely proud to be part of your national security team and to be proud of what it has accomplished in your first term. looking ahead to the second term i want to commend president obama on his decision to nominate chuck hagel as the next

secretary of defense. let me also add as former director of the cia to commend the president for his choice of john brennan. i had the opportunity to work with john on counter-terrorism issues these last four years. he knows the cia. he will be a strong leader of that great intelligence agency. i also known chuck for a long time as well. i had the opportunity to work with him closely, particularly in his capacity of the intelligence advisory board. i greatly appreciate the work he has done to strengthen our intelligent enterprise. it has been extremely important to our ability to improve our intelligence capabilities.

i also benefited from his work when he served on our defense policy board. chuck hagel is a patriot. he is a decorated combat veteran. he is a decorated public servant. i believe his experience, deep understanding of the security issues facing this country making the right choice to be secretary of defense. as for me, after close to 50 years of serving the american people, began in 1964 when i served as first lieutenant in the united states army. then in both the legislative and executive branch positions in washington. the time has come for me to return to my wife sylvia, my three sons, their families, our six grandchildren, and my walnut farm. dealing with a different set set of nuts. [laughter]

i want to deeply think my family for giving me the fullest measure of love and support during my many absences throughout my long career in public service. i will leave with a sense of pride in what we have accomplished during these last four years, being on the president's national security team. as both director of the cia and the secretary of defense, i've always believed our fundamental measure is to keep america safe. because of the outstanding dedication of our intelligence and military professionals america is safer and more secure than it was four years ago. we have reached a turning point after more than one decade of war. as we reach that turning point, we developed a new strategy for the 21st century.

we have decimated al qaeda's leadership and weakened their effort to attack this country. we have brought wars in iraq to an honorable conclusion. we have opened up opportunities for all americans to serve in our military. we continue to support our forces, their families, and our wounded warriors. these are some of the achievements that i am proud of. let me close by expressing my profound gratitude to the outstanding team of military and civilian staff and leaders that i had the honor to serve with at the department of defense and at the white house. in particular, let me deeply thank the outstanding men and women in uniform who have had the privilege to serve and need.

those who put their lives on the line every day on distant battlefields for this country. their sacrifices teach us that freedom is not free. a strong democracy depends on a strong defense. you cannot have a strong and stable defense without a strong and stable democracy. as we continue to confront strategic challenges and fiscal austerity, my hope for the future is that the sense of duty our service members and their families exhibit every day inspires the leaders of this nation to have the courage to do what is right, to achieve the american dream, give our children a better life, and to build a more secure future. >> thank you.

i am honored by your trust and confidence and mindful of the extensive responsibilities. i want to acknowledge my family who are in chicago today. he is attending his first day of class is at depaul university. and to my friend leon panetta. thank you for your service to our country over so many years and in so many capacities. you are one of the premier public servants of our time. to follow you will be a most challenging task. i will try to live up to the standards that you, bob gates, and others have set for this job and nation.

let me also express my deep appreciation and congratulations to my friend john brennan. and to acknowledge the president's confidence and trust in john brennan. thank you, mike, for your continued service. i'm grateful for this opportunity to serve our country again. especially its men and women in uniform. these are people who give so much to this nation every day with such dignity and selflessness. this is particularly important as we complete our mission and support our troops to a sacrifice so much more than a decade of war.

am grateful for an opportunity to help continue to strengthen our country and their alliances. and advance global freedom. we help build a better world for all mankind. i will always do my best for our country and those i represent at the pentagon and for all of our citizens. i will always give you my honest and most informed counsel. thank you very much. >> thank you for your very kind

remarks and the trust you placed in me when asked me to be acting director twice. i have the honor of knowing and working with john brennan for the last 20 years. we have worked particularly closely the last three years. john brennan is an intelligence professional with deep experience in our business. and public servants with extraordinary dedication. a man of deep integrity. with senate confirmation i know he will be in all standing director of the central intelligence agency. john started his career at the cia and spent nearly a quarter century. this is a homecoming. on behalf of the talented and dedicated men and women of cia, it is my deep honor to say "welcome home."

>> mr. president, it is a tremendous honor to be nominated to be the director of the central intelligence agency. the women and men of the cia are among the most dedicated, courageous, selfless, and hard working individuals. at great personal risk and sacrifice they have made countless and valuable contributions to our national security and safety. leading the agency in which i served for 25 years would be the greatest privilege as well as the greatest responsibility of my professional life. i want to thank you for your confidence in me.

even more for your confidence in constant support to the cia and those who serve the intelligence committee. they need their support of every american especially during such security challenges. if confirmed, i will make it my mission to make sure the cia has the tools it needs to keep its mission safe and the work reflects their liberties, freedoms, and values we hold so dear. i am proud to stand here today with such patriots as a leon panetta, chuck hagel, and michael morell. i very much the forward to the opportunity to serve with another of america's great patriot, chuck hagel. i am especially proud and has to be able to stand here today with a close friend and colleague michael morell which epitomizes what it is to be a defense professional.

he has been nothing short of exemplary. i very much look forward to working with you in weeks and years ahead. i also look forward to working with congress. and-security rests on the ability of the legislative branches of our government to work as our team. while the profession often times demand secrecy, it is critically important that there be a full and open discourse on intelligence matters with the appropriate elected representatives although i consider myself neither a republican or democrat i look forward to working closely on both sides of the aisle.

the political landscape looks like. >> can you remember the first time you thought you might have a little bit of leadership capabili in you? >> wl, i suppose like all of us, we didn't dwell on such things. those young ages. but i always thought that having people around you and being part of an effort, a team, a process, a system, was a big deal and i suspect that the first realization of that came when i played on little league baseball teams, and you saw leadership develop on those teams, and i never really thought too much about myself being a leader. i just did what i thought was right, and said what i wanted to say, and it all followed.

i think that's what life is about. it takes you in directions sometimes you don't anticipate if you're focused and doing what you think is right and working hard and then luck plays a little bit of a role in all this as well. >> there's a pattern we see develop of people who come to washington, talked to governor mark warner in our last program and he was president of his senior class. no president of his class in high school three years and i notice you were president of student council. >> i was. and i enjoyed that job. it was, again, part of something bigger than yourself and your own self-interests. i've always enjoyed bringing a consensus of purpose together. i've always been stimulated by that, focusing on projects and big issues, and trying to do things for your school or your community that you can be part

of, t leading that effort is a big deal. i think also it's part of who we are as individuals, and to have the trust of others, whether a student council president or the people of nebraska is something that i take seriously, and encourages me and inspires me and i know that doesn't fit for everyone, but it does for me. >> what was it like growing up in the hagel household, four boys if i count right. >>'m the oldest of four boys. i have a brother tom who is two years ynger. he a law school prove store at university of dayton in dayton, ohio. my next brother three years younger is mike who is an illustrator, commercial artist, has his own firm. both have done very, very well in their lives. i'm very proud of each. our youngest brother was eight years younger than me. he was killed in a car accidt when he was 16 years old. when i was 16, my father died on

christmas day, so my mother was left with four rather spiritted boys that she had to raise and i think aside from the fact that she raid one politician and one lawyer she did pretty well. but my mother passed awatwo years ago and she really was the centerpiece of our family. my father was important, but, you know, after a while it's your mother who certainly took over and raised the kids and worked a couple ofobs and did the things that many mothers and single parents do today. so i have a real appreciation for families that have to deal with that, and kids that come from those kind of families, and i have great respect for single parents. >> your brother jimmy would have been -- you would have been 24 when he was 16. when he died what impact did that have on you? >> well, it was particularly

difficult because the year he was killed my mother remarried, and my mother and her new husband had moved to a new community where they could start over. my brother tom and i had just finished combat tours in vietnam together and both came back ok. so my mother felt pretty good about this, and about four months after she was remarried my brother and tom and i got back from vietnam her youngest son was killed and it was tough for my mother because my brother jim was in second grade when my father died, soy youngest brother jim and my mother were really insep par scombrabble for many years. he went wh her for many years. it was tough for the family. i was close with him. i coached him in little league football and baseball. i was a surrogate father for him. any time a family loses one of

their siblings and one of their immediate family it's tough, especially at 16. >> i want to play a piece of -- not a videotape but an audiotape for you because i read that this particular conversatio had an impact on you. let's listen. >> what do you think about this vietnam thing? i would like to hear you talk a ttle bit. >> frankly, mr. president, if you would tell me that i was authorized to settle it as i saw fit i would respectfully decline. it's the damn worse mess i ever saw, and i don't like to brag, i never have been right many times in my life but i knewwe would get in this sort of mess when we got in there and i don't see how we get out of it of the fighting a major war with the chinese and them down there in those rice tties. i just don't see it. i don't know what to do.

>> they impeach a president that runs out, wouldn't they? >> i don't believe -- >> richard russell and l.b.j. in 1964. do you remember when you read this exchange? >> i don't remember the exact year. i recall over the last couple of years, i listened on pubc radio to most of those tapes, and renewed my understanding and appreciation of those tapes and what was said and the significance of what was said on those tapes. >> what's the significance for you? >> well, significance for me is how easily a nation can be drawn into a war with major consequences for that country. when none of its leaders or essentially none questioned that

process that took us into vietnam, the policy that kept us in vietnam, and probably worse the excuses as to why we were not winning. and i think the fundamental responsibility of any elected official is to probe, is to question and certainly one of the greatest responsibilities of congress, not just constitutionally is oversight. what is our policy? why is this our policy? where is this policy leading this couldn't? what are the consequences of this policy? those questions western asked when we were in vietnam other than by the chairman of the senate foreign relations committee and maybe a couple of otrs. we just let this thing drift for years and consequently 58,000 americans died. we ruined our military. we had hundreds of thousands

wounded. and it's taken a generation to build back out of that. so, that's the lesson that we all in these positions of trust and responsibility must ask the tough questions. >> you went into the army what year? >> i went in the army in 1967, april of 1967. >> enlisted. >> i volunteered for the draft and went i as an enlisted man. >> how about your brother tom >> he volunteered for the draft and went in 30 days after i did as an enlisted man. weent through basic training at fort bliss, texas together. we went through advanced infantry training in california together and we ended up in vietnam together. we volunteered to go to vietnam. >> why did they let the two of you to go to the same place? >> i had orders to go to germany. at the timi went through advanced infantry training i was given orders to go to white

sands missle range for a three month then top secret course on then a very top secret weapon. it was the first shoulder fired heat seeking misslealled the red eye missle gun. it was produced to bring down low-flying soviet aircraft in europe. and it was the first of the most sophisticated shoulder-fired missles. and i went out to white sands and took that course for three months and then along with the nine other guys in my unit, there were 10 of us, we were ordered to germany. we would be integrated into nato units there. i got to fort dix, new jersey in november of 1967 and we were getting ready to board the bus to germa, i took my orders down to the orderly, said i'm going germany but i want to volunteer to go to vietnam. my brother was going to germany

well as a cook. and he volunteered to go to vietnam. and the reason they let us both gos because first we essentially gave up our rights, which at that time stipulated that no two members of the same immediate family would have to serve in a combat zone at the same time. since we both volunteered to go, then that took care of that stipulation. >> why did you want to go? >> i thought if america was at war at the time, it needed its best people. i thought if i was going to be in the military and spend a couple of years serving this country, then i should go where there was a war. not war games. and i just felt it was the right thing to do. my father had been in world war ii. served overseas in the army air force. he was a radio operator tail gunner on a b-25 on -- in the south pacific, 2 1/2 years overseas.

i'm in the process now and my brothers have been of reading many of his letters he wrote back in 1942 to 1945 to his sisters and parents. remarkable, remarkable letters. and we had a tradition of american legion, v.f.w. growing up in little towns in nebraska you served. there was an expectation to serve. you served where you thought your country needed you most. my grandfather had not been overseas but help been serving in uniform in world war i. i just felt it wa the right thing to do. if america said this was the right thing to do, it was the right thing to do. >> so, how close did you come to dying? >> i don't think i ce very close to dying. i was wounded twice. my brother tom and i were wouldn'ted twice together. my brother tomas wounded a third time. serious wounds but not lasting. i still have shrapnel iny chest and both ear drums were blown out and still have

problems with my ears occasionally. my face was burnt, left side of my body still some shrapnel in my back but known really life-threatening. my brother's tom's wounds were about the same. >> what's the storyf the two of you when you were together and wounded at the same time? >> the first time we were unded we were on a patrol crossing a stream in the middle of the jungle and my brother and tom and i used to walk point most of the time, one of us would carry the compass and the other would be out on.and we just felt better the two of us out walking the point, and he was very good. we wereotated back to the next squad after we had been breaking the jungle for about six hours. and about a half-hour later the point squad taking us across the stream, one of the guys hit some tr wires, booby traps in the stream and there were lae mines in the trees and once those trip wires hit, the full

blast of those big chinese mines hit, and killed some of the guys in the front where tom and i had just been a half-hour before, hit both tom and i with a lot of shrapnel and we had to medivac the dead out and serious wound because you couldn't move. the v.c. opened up on us once we had been pinned down. so it took us all day to get them out. tom and i walked our guys out at night. and went a long way to get back to base camp. the second time we were surrounding a village, at midnight, 1:00 in the morning where the v.c. had been in my armored personnel car erwas the first in, we were the track in, so we were the last ones going out after we had secured the village, it was about 2:00 in the morning. we ran over a 500 pound bomb which destroyed armored

personnel carrier and i was burnt and both ear drums blown out and shapnel and my brother tom was knocked unconscious, and his ear drums were both blown out. i s on the track throwing gs off. some were dead and some were wounded. and the concussion was so powerful that it just vaporized so much. we got everybody off the track, blew up, the v.c. opened up on us, our guys came back to get us. so, we were medivaced out that night, tom and i were out of that area after we got the dead out and the ones who were wounded more severely than the two of us and then they took tom and i to a field hospital for about three days where they patched us up and we went back out in the field. >> now, you were how old then? >> 21. tom was 19. >> if you ran for president, if you became president, what impact do you think that

experience would have on the future of how you would look at the military >> brian, we're all products of our experience, of our environment where we come from. i have been tempered by that experience about war. what war means, the consequences, who has to fight it. all of that experience is part of me and how i look at policy, how i look at our foreign policy, how i look at our military policy, how i judge consequences, how the world sees us. their trust in our purpose, in our power. no question that much of the questioning i had done about iraq, ev before we went into iraq was conditioned by, tempered by that experience in vietnam and whatever i will ever do in my life, whether it's in politics or outside, those

experiences shaped me just like anyone who has gone through war. those experiences shape you very much. and one of the things it does is it makes you less inclined, i suspect, to jump into war. it's easy to get into war, not very easy to get out as evidenced by the johnson tapes. and you need to think through these things, diplomacy is critically important especially in a complicated world that we live in today. i think something else is important here and certainly it's a lesson we learned from vietnam. what is going to be very important for america and for our future is not to isolate ourselves unintentionally isolate ourselves in the world. we did that in vietnam. we've done that to some extent in iraq. we need friends, we need allies, we need institutions and structures like we form after world war ii of common purpose dealing with common challenges. terrorism is a common challenge, it's not unique to ameca.

if wwant to win against terrorism it's going to take all of these relationships, seamless networks of intelligence sharing and gathering. yes that experience in vietnam has shaped me and will continue to shape me. >> what would it be like if you and john mccain ended up running for president on the republican ticket at the same time? >> i don't know. john mccain is a verylose friend of mine. there's no one i admire more than john mccain. we think alike on many things. we are different too. i disagree with john. john disgrease with me on issues. but how all this plays out over the next two years, i don't know. but regardless of how it plays out he will always be a good friend and i will always be a great admirer of his and i'm grateful for his service to our country. >> can you see yourself running, if he runs, will that impede you from running if he says i'm going again? >> well, brian, i think in this

business, or any major decision one makes in your life, that decision has to come from you first. it's got toome from you, the considerations, or your family or other personal issues. then you start working through the more external conditions. you know in this business that if you run for president there will be many very qualified candidates out there, some will be good friends, i suspect. you know that. and you factor that in. and you're not unmindful of that kind of competition. and that kind of competition is good for the country and good for our system. we want the best people in this business. so, whatever designatures john makes would not influence my decision. >> you guys ever talk about this? >> no. he's not there yet. i'm not there yet.

you know, he said he'll make a decision after the election next year as i have. there's no question he and i are both mindful of his interests. i've encouraged him. i said i think he needs to be out there looking serious at offering himself for the presidency in 2008. he's built a very strong base of support. he, i think, is e most inuential senator in the united states senate today. he needs to keep offerin himself out there, his ideas and his leadership. again that's good for this country. as the democrats need to do. >> before you went into the service, you went off to an institute in minnesota to study broadcasting. brown institute or something like that? >> yes. >> what were you doing? >> well, i was trying to really get my life back together. i was trying to find a new center of gravity for chuck hagel. i had been to three colleges and

had not done very well at any of them. i had a football scoip to wane state in nebraska and i got hurt and never was able to rebound from that. i was aimlessly drifting on colleg campuses, having a great time but i wasot enhancing the institutions where i was enrolled, nor was i enhanng myself. i got to a poi one day where i just had a little talk with myself and i said chuck, oh, boy, you better get straightened out, you're not going awhere. and yo need to figure some things out. and i had heard about this place from a couple of friends and i had always had an interest in radio and television. so i thought well, this might be something that could get me refocused, put some new discipline back in my life, get me back where i need to be with some center of gravityn my life and a purpose ando i took

my old 1957 edsel and drove it up to minneapolis early january, right afr new yeas, and i spend a year in 1966 in nneapolis attending brown institute. graduated. loved it. thght it was a great business, radio. came back and started to get into that business. worked for a radio station in omaha, in lincoln, council bluffs before i went into the army. then when i came back to finally get my college degree at university of nebraska, omaha, got back into the radio business. >> it was in that job, if i understan it correctly, that you were able to talk to the congressman from that area that john mcallister. how did that happen? what were the circumstances? >> i met the congressman who had been elected in 1970. he defeated an incumbent in the

primary which was impssive and went on to win a very tight race in 1970 against the number one rated television anchor in the omaha market. john mcallister at the time was a douglas county commissioner in omaha. got acqinted with him a little bit through different interviews and covering them in the news business and on some of the talk shows i had. and i decided as i was getting ready to graduate from the university of nebraska and omaha in the spring of 1971 i was i wanted in coming to washington to look for a job. i had never been to washington or in politics. i had always been fascinated with government and politics and history. so i went down to a department store, i had a credit card that i had never used and i bought two suits. i didn't have suits. and i bought two suits that

looked a lot like two senators that i would see on tv, ted kennedy and howard baker. the green pinstriped looked like senator kennedy's. i bought those suits on credit, and went to washington. spent a week in washington going around talking to people and just, in fact, last week talked to former congressman and senator jim broyhill from north carolina. i reminded him i had gone on an interview with him. i talk to anybody who would listen to me and take my resume. i went from door-to-door, literally with republicans and leave my resume. congressman mcallister said he would help me. at the end of the week i was shocked no one offered me a job. i went back to omaha. as i was finishing college, i was graduating in a movement went back to my full time radio job at klng in omaha. about three weeks later i got a

call from congressman mcallister, i'll make you a deal,f you want to come out here, i have these question nares that are coming back, the results, and i'll give you a job, $200 a month if you grade those question nares, do some stuff around the office, work half days, you can look for a job the rest of the time and i'll let you live at my wife and my house,nd our youngest s is there but he's going to be leaving, we have a big house you can stay free, $200 a month lk for another job. i didn't think that was all that attractive. i had grander vision than that about my future. went and tked to my boss and he said, i think you ought to take a look at that. can you always come back here. can you always come back to radio. by then i bought my brother mike's 1965 chevy impala. loaded it up with everything i had. went to work for the senator in july of 1971 with a little chair

and table, rating question nares. >> how long did you do that? >> i worked for him kind of a part-time but turned into full-time for about a year, and then i went back to learn about his campaign and be his campaign coordinator in 1972 and after that election in 1972 he made me his administrative assistant. >> how long did you do that? >> i did that until he ran for the senate in 1976. he was defeated. that was 1976, left in january of 1977. so i worked for senor mcallister from 1971 tost 77. really learned probably as much from him and his style and philosophy about government, how to do it right with class, with

ability and with integrity. that was a tough time, if you recall. that was watergate, vietnam. those were difficult years, especially for conservative republicans. but it was congressman mcallister who framed for me a philosophy about government and gave me a real frame of reference that i still use today. >> how is it that when you became a republican and a conservative, your brother tom became a democrat? >> well, if it had been the other way around he probably would be a conservative republican today. he and i are very close personally, as i noted my brother mike, very, very close. our political philosophy in many ways is close as well. i mean, you give tom or me the underdog, we'll take the underdog always. i mean we'll always challenge the institution we'll always challenge the power. i do it maybe a little differently than he does it.

but basic beliefs in our country, our people, our system, we don't disagree. how we come at it, we do disagree a little bit. but i don't know. he became a democrat and i became a republican. and i suspect when he and i both came back from vietnam, attitudes about the w may have influenced some of that. he was very opposed to the war when he came back. i was supporting our effort in vietnam when we came back. and that probably put us on die severe intelligent political paths. >> you aagree today on vietnam? >> he we do. >> was it e learning what l.b.j. said about it changed yourind? >> not just that. an accumulation over the years of understanding, really, how it was a lie at the beginning, from the gulf resolution, the

process, the misrepresentation to the american people. the folly of how we conducted that war. not listening to some of the people we suld have. not the intent. the no built of the effort and what we tried to accomplish. i still feel strongly that, that was noble and that was good. but the conduct of the war was wrong, t lying and the deseat was wrong and so we have now pretty much come to the same place, although we do some disagreements on it. but we're pretty much where together on the end. >> how do you differ on the iraq war? >> well, you know, i have been rather direct on my concern about why we went in, going in,

not planning, not preparing, not thinkinghrough consequences. i think we both aagree on that right from the beginning. i think we're pretty close, actually on the iraq war. i voted for the congressional resolution. that ge the president the authority to use force if diplomatic, all diplomatic efforts failed and if only war in the end was the last resort. i also made a speech on the floor of the senate a coue of hours before i made that vote, and i define why i was voting with some apprehension for that resolution. my brother tom, if he had been here, he would have voted against that resolution. we're pretty close, i think, on most of these thing. i don't believe and i've said this, and i'll give a major foreign policy speech to the

foreign relations council next week on this and some ideas about how we change our policy in order to get us out of iraq but we just can't get up and leave iraq. we cannot allow this to become a 1975 when we took the last remnants of o influence out on a helicopter on top of the u.s. embassy in say gon. we can't do that. we've got to work our way out of this in a way that doesn't even further destabilize the middle east which i think our president has done. we've got to try to do everytng we can to enhance the security there and do everything we can to enhance the iraqi people with some opportunities to govern themsels but in the even just like in vietnam it will be up to the people. the people of iraq will decide their future. we can't impose that future for them. we can help them. we can buy them some time.

tom and i have had long talks about this. >> kenneth fine berg was the special master who gave away the money, the $8 billion to families of 9/11.'s a little bi interview we did with him a couple of months ago. >> senator hagel is the reason i was appointed as a former chief of staff to senator kennedy i wasn't exactly the person who everybody thought would be assigned this task by the attorney general and the administration. chuck hagel who i've known since agent orange for over 20 years personally pushed at the white house and at the department of justice claiming that i was the right man to do this. >> explain this to outsiders. here's a democrat, i don't know if he's a liberal democrat, he sat here and talked about you at great length.

is very much supportive, i guess of your last cadecy. is evolved in your campaign? >> he's a big supporter, financially and in every way has been very generous in hping me and supporting my political action committee as well. >> people are talking aut getting people together. here we have a republican and democrat. why did it work between the two of you? >> because w had a higher purpose, that we were both focused on when we first met and that was the agent orange settlement. at that time i think that was the largest out of court settlement in the history of our country. about $200 million and judge wine stein called me oneay and asked if i would come up to new york and visit with him about this. >> where were you then? >> i had just left the v.a. and was starting my companies with my business partners. and so i did. judge weinstein laid it out, this is what we got, we have $200 million, we don't know what

to do with it, how to spend it, what we should do and i would like you to put together a board, make something out of this, define what it is that we can do with this money and he said the special master in this is a man by the name of ken feinburg and you would be working closely with him. i agreed to do it. i set it up. every day i had no financial stake in it. i had expenses paid any time i travelled. but i was given no stipend or no consulting fees which i didn't want any. and ken and i became very close through that. but there was a purpose to this. how do we take $200 million and get at to the people who need it most. that is really the essence of the process and of who we are as americans and how we should strife and we can do things together regardless of political

philosophies if there's a purpose and there's a consensus to that purpose and ken and i have worked on a number of things like that and he's a democrat, i'm a republican. and sure, there are differences and political philosophies. there should be. that's healthy. that presents to the american people options and you pick what you think philosophically where unit. but that should never exclude doing for our people and our country what must be done, and doing not only the right things, but enhancing our country. that's what's brought ken and i together. i happen to personally be very, very phoned of him and we've developed a very strong relationship. by the way, he has with attorney general john ashcroft, i just saw john the oer day, last week and he brought ken feinburg up and we have lunch witnesses a month and these two guys philosophically are about as far apart as anybody in the

political spectrum. but they are great admirers of each other and they are friends, and, again, it's a common purpose that you nights. >> i mentioned earlier that last week's interview was with governor warner, you have a number of things in common, you both were paper boys, leaders in high school, you both got into the cellular phone business and made a lot of money. how did you get into it? >> warner made a lot more money than i did. i had an opportunity given toe by a couple of old friends who had been in the cable television business, don clark, dave smith and bill collins, and we were always going to do something together, and i would always say, well, ok, i'm interested and then go do something in government or some other project. i left the veterans administration in 1982 and they

came to me and said we think there's a new technology out there that's really going to develop into something, and i didn't know anything about it, most people didn't. so i was looking a different options, so i started reading everything i could about this wireless thing called cellular. this is 1982 and at & t was being die vested which unlocked all these great new technologies. so i went up to new york and visited with a couple of friends of mine that were worki for big investment banking houses who are telecommunicates specialists. i read. i was convinced that this thing may be something pretty important and corks in fact, revolutionize telecommunications which it did. it's still doing. so, i went back to bill and don and dave and i said, well, i'm ready to do something. they said here's what we'll do. we'll work it out that you can

own a third of the company. we'll take the other two-third. the other three guys. can you be president. you'll have the biggest share. t we'll control the two-third. you'll have a third. and i didn't have a money. and they said that's ok, you put whatever you got in. that's how it started. i had a 1985 buick and i had two insurance policies, and i sold the buick to my mother, and her husband, and i cashed those insurance policies in, i think i got about $1,200 each. i came up with about $5,000. we -- i put that in the deal and my partners said we'll give the rest of your equity as anded he quit and you be president, you run the outfit and we'll see what we can do. and that's how it all began. >> how many years were you in that business? >> well, we formed collins,

hagel and clark in august, september of 1982. we had collins, hagel and clark for three years then we brought some new partners in from north carolina called vanguard then rolled our interest into that company. then i was with vanguard, the new consolidated company from 1985 to 1987 when i took over as president, c.e.o. of the world u.s.o. but i stayed on the board of vanguard and was very active on the board and still did some management. so, there was a, from 1982 to 1987, five yearshat i did the cellular work full time nothing else and then three years i was president of the world u.s.o. i stayed on the board of vanguard cellular which that was the holding company that then owned about 36 systems with its

investors on the east coast. in 1988 we took that company public. >> now, governor warner said he wouldn't agree i said he's worth $200 million but he said he done have to worry. are you in tha same position? >> no i'm just a poor republican. >> does that mean if you got out of this politics business you would have to go back to work? >> well, i've done well. and it has given me some independence. >> so, what wast that led you to believe that you could run for senate in 1996? was that your first run? >> it was the first run. for public office. other than student council president and president of my from a ternity and those kinds of jobs. i've always thought that if an opportunity presented itself for high public office i would hope to be in a position to maybe take advantage of that. what does that mean? well it means first where are you with your family?

where are you with your business? where are you with other obligations that are more important than running for office or at least i think they are. in 1995 i looked at that senate seat, i don't know -- i didn't know at the time whether the incumbent was ing to run for a fourth term or retire but it didn't make any difference to me. i made the decision with my wife. this was the right time to do it. my business career, my family, i was 49 years old, i was going to be 50 in 1996. my dear, dear friend and business partner at the time, mike mccarty said if you want to do it go do it. so, all aboard was kind of cleared. our children were very small. they were 2 and 4 years old at the time and i think if you are going to do this that's a

perfect time for children to do it. it just w right, brian. i felt right about it. i felt good about it. and i just decided to do it. and kind of the same answer i would give you to the question about john mccain. i fullly expected that there would be strong competition in a primary and in the general election, thinking i would probably run against the incumbent of a united states senator. as it turn out i announced in march of 1995 i would run. the senator announce add few months later that he was not going to run for a fourth term. i don't think it had anything to do with me scaring him out. but he had enough. help been a two term governor of nebraska, 18 years in the nate, he wanted to retire. so i worked all of 1995, all over that state and all 1996 going every where. no one knew me. worked as hard as i've ever worked at anything for people to get acquinted with me.

tremendous experience. one of the greatest experiences of my life those two years. >> you ran against the governor. >> i ran against another governor. i ran in the primary against the incumbent republican attorney general. don stenburg. i won. then i won against the incum been governor who is now my colleague in the senat ben nelson. >> how did you beat him? what did you use? >> well, in august of 1996, ll every poll showed that i was 25 points behind. there was three months before the election. and i think it's like everything in life, brian, there's no magic bullet, no one thing. it's an accumulation of tng, of building a team, of building a process, of building a profile, of building a campaign that was strong and that was preparing itself to win.

and like everything in life, building c-span, building your life, building anything, it doesn't happen in a day or a month or a year, if you do it right. and we did it right. i had tremendous people. low ann was a housewife, mother of four who never ran a campaign like this. i asked her to be the campaign manager. all the pros said what a dister. this woman doesn't know how to run anything. she ran campaigns for county sheriff and done well and electe a county sheriff but i brought those kind of people in, new people, young people, fresh people, and i just worked hard and went out and convinced people i should be a united states senator and we were able to get a lot of traction and a lot of fresh ideas and a lot of new ideas and, well, for exame, o of the first things i did in late 1995, i wrote a book -- not a book, but a

booklet. it was very simple. it said this on the front. "where i stand i took 50 issues and i wrote a paragraph, i wrote it. i didn't ask anybody, i wrote a paragraph on where i stood on 50 of the biggest issues facing our country, certainly would be facing the senate campaign and i laid those out. a lot of people said why would you do that? you don't nd to do that. i did a lot of things that no one else had done before. but i thought as i td my wife before when we started i don't know how it's going to come out but one thing i do know we're going to do it rht, we'll run a campaign that people can be proud of, nebraska can be proud of, i'll be a senator this state with be proud of. you may not always aagree with me. that's the way we won that campaign. we won that race by 14 points. >> this is your second marriage? >> yes >> how long was your first? >> two years. >> you met your wife, which is not a name you hear in the north

very often what year? where was she? >> she was working for chairman sammy montgomery, a congressman from mississippi, she's from mississippi. sony was chairman of the veterans affairs committee. she was the press secretary. and so that's when i first met her in 1982 and we were married in 1985, and we just celebrated our 20th wedding anniversary in april. >> how old is your two kids? >> our daughter just turned 15, two weeks ago and our son just turned 13 two weeks ago. so that's a zone there that i'm constantly understanding and learning about, those teenage years. allan, our daughter is a freshman at oak crest, which is an all girls catholic schooln mcchain and our son is in

potomac at an all boys school in the heights. >> would you put a label on yourself, conservative remember liberal, moderate? >> i think labels come as a result of your political philosophy and certainly in my case your voting record much and if you look at my voting record and if you look at my political philosophy it's conservative. i have one of the most conservative voting records in the united states senate. i suppose some people are perplexed by that because i challenge republican administration on the war and other issues, detainee issues. but i do what i think is right and i say what i think is right and i don't ever worry about is that republican or democrat or is that a conservative or moderate thing to do. that's the way i've done everything in my life. >> would you define this president as a conservative? >> i would define him as a conservative, although five

years of his policies don't always resound in a conservative way or with a conservative political philosophy. when you look at the debt we've run up, you look at some of these issues, like i vote against no child left behind, i thought it was the largest federal land grab in the history of this country, i think that philosophically impractically the wrong thing to do, medicare reform bill and some of these things are just adding more and more obligation and debt to entitlements. i voted against those. and i'm always a little bit wewhich wouldered because it's not just the president's responsibility, it's the congress too. yet we have a republican congress and a republican president that's accumulated more debt than almost anybody in the last five years in the history of our country and built a bigger government. this is coming from a conservative republican party. >> now, nebraska, since 1972

they voted for republican for a president almost two to one out there. do they, people living in nebraska consider themselves conservative? >> i think so. but nebraska, you got to remember, is part of that populace built. the first presidential convention was held in omaha in 1896. that populism that spread down from the north, that still woven into the fabric of nebraskans. that's important, i think, because it allows nebraskans to challenge and to probe and to question. we're unique in nebraska in that we have a one house legislature and it's nonpartisan. so the 49 state senators don't run as democrats or republicans, they just run. >> do people know who they are. >> they are registered but they don't campaign on that or form

or govern with any party structure. the chairman of the committees are elected by the committee members. it doesn't make any difference what you are. there's a tradition for that. you look at nebraska's history, o oh one going strongly for the presidential republican candidate. in 197676 i was the first republican elected to the senate in 23 years. the democrats dominated the governor's races, lieutenant governor's races, for many, many years out there. so it's an interesting phenomena but nebraans are independent minded. they are philosophically conservative when it comes to governance, but they will obe deeply, and i think that gives them a great die mention. >> let me ask you about the conservative label in all that. it seems, as i listen to callers all the time, that people are, who support george bush are

wondering are they conservative, are they george bush supporters and it leads to what the thinking will be in 2008. will you be able to run totally as an independentent? i me we were told when president bush was campaigning, republicans and cservatives didn't believe in a nation building, they believed in a balanc budget. can you throw this stuff out the wiow and nobody cares in this country? >> i don't think you can do that. evts dictate an awful lot of this. i've always believed political parts, leaders must be anchored with some philosophy about governance. they must be anchored with a set of standards and values. >> what's your first value then? >> trust. honesty. i think everything has tommy nate from that. that's the only cure rhode island rency you have. >> if you ran for president, somebody is going to ask you will you raise taxes?

how do you deal with that >> you deal with that like you do all the issues. some will deal with it differently. >> will you sign that pledge? >> no i wouldn't sign a plenl. i can't sign a pledge like that. that's the whole point of governance. i don't believe in those kinds of things. for example, you take issues, a fiscal policy issue is one thing and taxes and reside in that universe. you take anoth set of issues like abortion, pro-life, pro-choice. i don't think you can negotiate those things away. i don't put that group of issues in the se group of issues that i do fiscal policy or monetary policy or foreign policy because those are policy issues that shift, change. you have a philosophy about

those. sure. i'm a low-tax, low-spend conservative republican. my nine years in the senate indicates that and very clearly demonstrates that. i don't say one thing and vote another way. everything i say is backed up with my voting record. on the social issues which is another part of me, most of us don't argue about that. that's just what i believe and that's where i am. so if you want me to sign a pledge on that that's fine too. but to say you are going to sign pledges on monetary issues, fiscal issues when you don't know what the world is going to look like in 201 you don't know how much trouble this country will be or where we'll be is irresponsible. that's why we elect people to govern. it's judgment. tough designatures. making the hard choices. we've not done much of that in the last five year. >> was the prescription drug bill nothing but a campaign gym mic? >> i wouldn't y that because that impugns the motives of some

of my colleagues who felt strongly about it >> you voted against it? >> i voted again it. there were only two republicans that voted against the motion to proceed, and there were some other republicans that voted against the bill. but then it didn't really count because it was a straight majority vote and you had 51. john mccain and i were the only two. that interesting i suspect because mccain are often referred to as moderate republicans when we were the only two republicans that voted to stop that bill because we thought it was irresponsible. and, i think there was a campaign dynamic to that and i don't question it in my mind that there was a political dynamic to that. some of my colleges felt strongly about it. so i would be careful how i would say it and i don't ever broad brush, broad soke my colleagues or impugns other senators votes. >> is there anything conservative about that prescription drug bill? >> not that i'm aware of.

first of all, the way it was done was done dishonestly. i think you a aware of that. we had a budget resolution in place that said we would not pass anything that went over 400 billion dollars over a 10 year period. there was a budget resolution in place that we passed. so, strangely enough the administration came back with the numbers that fit perfectly within that $400 billion. a month after that, then you probably recalled that members of the health and human services department came forward and said that they were told not to give the congress the honest real swers and real numbers because that number was now somewhere in the $600 billi cost range, now it's about $850 billion, probably going to be over a trillion. the real cost of that over 10 years. so it was very dishonest the way that was handled. >> handicap the chances of chuck

hagel being a presidential candidate? >> i don't handicap anything. >> you not making the designatures until after the 2006 election >> i will not make a decision on my political future until after the 2006 election. >> will you run for senate? >> we don't have a law. even if we did i wouldn't do that. that's not a fairway to do it. others do what they want to do but i do things my way. once i make a commitment if i decide not to seek re-election to runor my party's nomination for president that's what i will do. if i decide to run for a third term that's what i will do. if i decide to get out after 12 years that's what i will do. >> what's the best thing about being a senator? >> an opportunity to participate in this great system to enhance americanand make a better world. >> tha

>> got about $7 billion. most of it was -- i believe. it was about 1%. most of it was from modernization of bases. some work for military construction. so we participated in job creation there but as i said before, i'd understand how to important jobs are in the economy we are experiencing

today. i still believe the department's main job is to propose a national security strategy at a reasonable funding level. the job issue should be handled by other means. >> here in the fourth row. cq.'m with following up on the budget question for fi14. and you expect that to be done? >> i think it is almost inevitable there will be some delay. normally we would be transmitting data but right now we are not ready to do that. called as be omb's to what delay occurs. we will quickly start looking at alternatives as we do constantly in the programming process. we cannot have a lot of guidance

yet. we will look at a variety in attempts to be as ready as we can women get top line guidance. -- when we get top line guidance. >> in august, you testified to congress about some of the sequestration. i'm curious about the joint strike fighter that would involve cutting four of the platforms. is that still the case under sequestration order that james a calculus? >> if we were giving illustrations in august. if sequestration goes into effect fully, which i hope will not cause, it would be a 9%

reduction in each line item of our budget and that would include joint strike fighter production. the program manager will have to look at that and figure out how they accommodate it. i think there could be some reductions but i am not prepared to say. >> i am probably the only person the in the room is not a journalist. do you see path that industry can help improving the efficiency and if so, what does that path? >> i can only answer that generally. i know that is quite general but i think it is the best i can do. holder better buying car initiatives -- working closely

with industry. we owe you some stability. we are not there yet but i am still hopeful we will get their after the next set of negotiations. >> center for arms control. would you clarify how much of the 487 defense said they could get from what they called efficiencies? i like your definition better. how does the sequestration figure of $62 billion, how do you a ride at that? i keep seeing a 57.4 billion. >> i can try. the five-year number was to lend

it 59 -- was $259. about $60 were from more discipline sources. it was probably roughly the same. i do not remember. the are starting to go from sequestration 101 to 201 now but let me try to be helpful. under the law before the new year's day legislation, there was a sequestration of about 54.7. our share was about 52%. there is also a cap in the budget control act and sequestration associated with that. in a prior law, we thought it would be about $10 billion. we now think the total will be more like 45 million.

-- like $45. it is smaller because they changed the law and some of the caps and reduced the size of the sequestration a garish asians. -- sequestration negotiations. is that clear? sorry. >> you requested authorization for base closures. how much savings are still there? we have seen the fifth round of the base closure process was one where it was difficult even more so than in past rounds. that is perhaps not surprising. >> i think there is consolidation's out there. i will not give you examples because that would end my tenure quigley but we believe there

are -- tenure quickly but i believe there are. there were more transferring units around and a fair amount of force protection efforts that were quite costly. the best i can do is some rough history. if you look at the 1993 and 1995 rounds, the average savings once we were fully in place with $3 billion a year. i think that is probably realistic if we get a base closure authority again. before we know for sure, but would have to go to the process of going to every base and insulation and organizations and asking for data and making specific decisions, and then letting the commission review them. her more savings to be had. both in terms in dollars and

personnel. if congress wants us to hold down defense spending, they need to give us authority to move ahead with infrastructure >> if you talk about balance. congress reversed those decisions there is a push right now to reduce active-duty and increased the guard. also the push that governors need to be actively involved in the decisions of the defense budget. comment? >> it did allow us to move forward to some extent. we got part of what we were looking for. that is good.

in terms of the governors, we want to work with them. not to the point of releasing information trade we need to work with them and we will. i am concerned generally that the congress wants both for lower defense budget. if we are going to hold down this budget. they turned down many of the requests we made to slow the growth that did the military compensation by changes in retiree health care. i believe we will need to continue to work with them to make changes. it is a challenge. >> one more. i think i saw a hand back there.

>> i was wondering if you could provide insight on guidance regarding sequestration, especially now that things have changed. are you eyeing guidance? >> we are looking at that. i cannot give you the timing are content at the moment. we are further along in the process. the guidance is out there. i suspect we will want to continue not to take specific steps in anticipation of sequestration. he still want the congress to not let sequestration go into affect. but we are looking again at what guidance would be appropriate in the near term. i am not sure what that will be.

>> thank you for the chance to be here today and for your thoughtful questions. i appreciate your time. [applause]

>> we are ready to start. i am peter singer. the director of the defense initiative here at the brookings institution. with the major and confusing

things going on today in defense and defense budgeting with various debt ceiling deals, averted sequestration or not averted sequestration, this is a very timely period to be having this conversation. we are joined by a fantastic panel of experts to help us cut trees some of this confusion. and pull back and look at some of the bigger strategic questions out there. i'm joined by three folks. the senior fellow and director of the church -- director of research here at brookings institution. he is one the most prolific voices in this issue and has written hundreds of articles, including one on foreignpolicy.com right now. his most recent book includes opportunity, why nuclear arms is still important and the wounded

giant, america's armed forces in an age of austerity. the larger and by one of the top thinkers and teachers in the field of security studies. he is a professor at columbia in university. his numerous books have garnered critical success from the american political science association for the best book in political science. he is also a key facilitator of a facility studies workshop. he has a great deal of experience in the policy field. the senior fellow, he is a former staff member a mark on the national security council and served six years on the national security advisory panel. most recently, he was part of a task force of experts about a

new defense strategy for a new era. and a scholar at the american enterprise institute. he has more than three decades of public service and higher education. he was president of the world bank, dean of the johns hopkins school of international studies and assistant secretary of state for east asia. and long served at the pentagon. the great panel to be joined with. i will pose a question to each one of them to kick off the conversation then turn it over to all of you. the first question i want to pose to mike -- what the heck happened on new year's day and even what does it mean for defense? what do you see playing out in the next weeks moving forward? >> thanks, peter. we just heard robert hale

wrestling with the questions of where we are in the process. we got a two month reprieve. keeping this among top of the lead for the most unstable budgetary decision making periods ever. especially when there is no quick surprise in the terms of military operations. the afghanistan conflict is in its 11th year. the pentagon has not a lot of opposition over its request for funds there. president obama may soon decide on a faster downsizing of troops. the $88 billion requested for overseas contingency operations and into 2013 is a relatively noncontroversial part of this whole thing. let me talk about a couple of numbers. that $80 billion is about half of where we were, need to be added about $550 billion in the base budget plus the nuclear

weapons activities of the department of energy is about $550 billion in 2013. we do have a defense authorization bill, it does have limited significance this year sent the appropriations which provide the money are being done on this ongoing continuing resolution bases and since sequestration is still a possibility in two months. to give a feel for that $550 billion, how does that compare to a couple of reference point? you can look of that number as being really big or modest, depending on your vantage point. historically in the cold war, we averaged about boarded 75 -- $457 billion dollars a year. that is adjusted for inflation. on the other hand, we are now down by about $100 billion from

repurchase the couple years ago. what's a because those war costs are coming down and because the base budget has not been adjusted for inflation in about three years. it hasn't been essentially flat. this estimate of the point -- this gets to my other point. the typical answer here reflects the politics of the person making the argument. more than it does budgetary common sense. let me explain what i mean. if you want to set the budget is still huge, use a $550 billion plus $88 billion. it is still well over three times cina's budget. case closed. if you want to say this is not a lot of money or that it is coming down, you point out that we have already had a freeze on

that budget for three years and we have been bringing down the war costs substantially. this year, it is about $100 billion less then it had been a few years ago. the other point i would make is $487robert hale mentioned billion. that is relative to the pentagon's previous plan that allowed for a little bit of growth above and beyond the inflation rate. the congressional budget office and establishes a much more neutral base. let's consider the base line for any discretionary programs to be current budget adjusted upward for inflation. relative to that base line, the pentagon is absorbing $350 billion in cuts. that does not account war costs. they're coming down even faster. i have probably thrown too many numbers at you to be clear, especially for the television viewer. but in summary, we are at the

point for you can have a good spirited debate over whether the budget is too big or too small. i will pass back to you. >> richard, you have worked on issues of strategy for your entire career and recently a study on a new u.s. defense strategy. what are the key priorities we should be thinking about today? what are the implications of those for budgeting moving forward? >> the key priority is one that will be hard to make -- to rethink some of the basic assumptions bit -- behind apopolicy and strategy. some were not reacted to as they should have been at the end of the cold war. we had high defense spending because it was necessary and affordable. today, it is needed. this may change soon -- it is neither. this may change soon. if we get into a cold war with

china. we should try to prevent that. the main threat to national security is terrorism. it does not account for the expense of parts of the defense budget. i would also argue that the defense budget has been too high and too small. depending on what you measure it against. i think it has been too small for the missions we define ourselves since the end of the cold war. a high degree of military activism and intervention. what has been an attempt to do all this on the cheap, with the important exception of the first war against iraq in 1991, we tend to underestimate the signet -- underestimate significantly the costs of the war we get into. the kosovo war, the second war against iraq, the war in

afghanistan and so on have proven to be much more difficult and taxing than we thought. if we are going to do this, we are kidding ourselves to think that even high defense budgets we have had since the end of the cold war are enough. i would say they are too much in that the need for that degree of military activism ended with the cold war. this is the basic political ideologue to call issue that -- ideologiacal issue. we should keep pushing in the direction that things have been moving in the last few years. that is towards a more modest view of military missions and requirements. it would be hard to make huge savings in the defense budget, although i think the problem with sequestration could be a blessing in disguise if that is

the only thing i can force the sort of discipline and choices the political system is unable to make. q. can make the case that the degree of activism have had -- i think it's a mistake to inflate leadership with the responsibility of doing the job ourselves. we have less than 5% of the world's population. less than a quarter of the world -- world economic product but over 40% of the world's military expenditures. i think we're providing welfare for the rich in that sense. leadership does not mean having to bear that burden. it means to me force in them to step up to the bar which they will not do as long as we make

it easy for them to ride free. it seems the basic problems pushed further into the the policy strategy choice armadas requirements that we have been used to for the last 20 years. >> paul, this timing of back and forth on but the uncertainty takes plaec at the same moment we're just starting a big endeavor within the pentagon a building the defense review. having gone through this process is both on the budget and qdr's , what is your revised to the people in the building right now starting at qdr process? might we be able to link the strategy side to the budget question ? >> can be done? >> i have been through qdr. it is an awfully bureaucratic process.

the process i remember quite vividly that i think it produced some radical change in strategy a reduction in force structure and budget with the one that secretary cheney initiated right after the fall of the berlin wall. he said i will go up to the -- i am going to buy you time to produce a new defense strategy and new force structure. we basically were able over the course of the next six months to come up with something called the new regional defense strategy. president bush have liked it, was going to announce it in a speech he was going to give in aspen. one of the radical things about

the strategy was to say the cold war is over, we do not have to plan for global conflict. but there were three regions of the world critical of the united states, one of which is the persian gulf. there is an iraqi threat. that was written in june of 1990. i do think in parallel with the qdr, i encourage whoever is the next secretary of defense to have a group that works -- these things the to be subjected to enormous public debate, but that begins with the first draft of the first paper, i guarantee the services will [indiscernible ]

the went through an enormous battle when they decided to cancel the crusader, the greatest artillery piece not built in history. it was definitely a cold war system. when once felled canceled it, we made a crucial decision. normally cancellation means money goes into the general pot and the services compete for it. i will never forget a few months later, i met the former head of the arms artillery school in fort still who had not come to the pentagon for simon. he said the key for to win the crusader. -- thank you for killing the crusader.

fast for about 20 months. the army faced another -- a comanche. it was the baby of the program director but the army needed helicopters. base of experience, they came to us and said if we kill the comanche, jimmy keep that money? he said yes, every dollar. as a result, we got new helicopters. at the stability in the budget process, predictability, is important to getting people to

say their favorite toy which may invested their careers and to creating, really is nothing as most leading. >> if there any things you want to respond to. i will cycle back through. ok. let's turn it to the audience. >> i think it is important to note two things that i observed. he denied u.s. the exact numbers but i know their views. it's the defense budget were to increase, the programs would be

cut every year because growth in health care costs -- which he is trying to control and maintain . >> i kind of love th way everyone is in the defense has to take a share. if we did of proportional shares, have not sure it is the right portion. i have never heard anyone say. a few minutes ago, we had a $787 billion stimulus bill. dod got 1%. as a result, we did not make

different decisions based on john consideration. but to put thousands out of work was not good economic policy. anyone would have minded. defense is always the first target. >> i think paul is right in many respects. this also relates the problem politically carried as time goes on, but we will see politically is a conflict between general spending on health care. some people came to see the

defense budget. it will be in merkel of the manager -- i think there is a coherent argument for why these levels have discussed spending are warranted. but if you make that argument and believe it is necessary, i'll like to hear people say exactly where the money is going to come from. whether it will come from health care, social security, armed subsidies, whatever. we can afford whatever defense we need. >> a, about whether we should

cut more or not. millie about the practicalities of doing so. there's talk of how we can get more efficiencies out of the defense department. usually, even though the pentagon looks very loaded, when he tried to become more efficient, you want to cut away certain things. some of that is okay. when you try to make efficiencies, it takes time. we are focused on a five or a tenure savings horizon. the 2005 round but nothing was in the money in. in the hopes that some day it might yiled savinds.

that is not the best example of future possible savings. as closures always take five to seven years, even if you breakeven on annual basis. a democracy it has been asking so much of its men and women in your form99.9% of the country would not want to touch veterans' benefits. there is a subcategory of fishes having to do with people for compensation by col. now we're spending about $25,000 per person and and uniform premier, more timid did a decade ago. $25,000 per person per year or more.

in the defense budget. i think most of that was probably the right thing to do. it still raises a fair question. can we rethink with the many that $25,000 per person per year increase from a hospital. at the we have to consider going back to that date. -- to that debate. it will be a process of ongoing reform and will take time. we need to bear the reality in mind as we construct our goals for tenure savings. >> just to provoke a little on

the strategy issue. he used the term military activism. he would define it. i think about it in terms of american leadership. the most voluble contribution made by our defense budget did not happen. maybe we would have had it is led japan on its own -- if we left japan alone. i'm proud of the fact that when -- we didnot pinnacle of

desert storm. -- we did not pay a nickel of desert storm. the japanese needed as. the people of the persian gulf are too weak to manage on their own. they need us. the fact we have been there ever since. there has been a serious effort to block energy from the persian gulf since the oil the embargo. we have been there. we were there when saddam invaded kuwait. i worry this rebalancing and not

be a rebalancing. i can understand the desire to leave that part of the world. i spent a good part of my career working in east asia. i love to focus on asia. i think it's important. americans are notoriously short memory. one cannot imagine the french treating germany the way we did. we are all better for it. we did not like vacations as much as a front probably do the will of occasions.

we took one right after world war ii and almost lost the korean peninsula as a result. korea was a terrible war. trimming cannot be run for reelection. we took a vacation. we have nuclear weapons, them have vietnam, terrible experience. that date we more or less scott their right after the cold war. the economic impact of spending our national security problem. what that is wrong is to say we will fix our economy. we could eliminate the entire defense budget and before long, the entitlements would put us in

a terrible deficit problem. if we have to leave, we have to be able to afford to leave which i think we must. it is a much bigger problem than just the defense budget. >> i am ready to hear from the crowd. >> please wait for the microphone and sand and introduce yourself. -- and stand and introduce yourself. >> he said we should try to do everything to protect. would you share some with of -- some wisdom on how to do that? he said stress from china.

is that the right signal to send? >> my view as an unpopular one. that is that the united states ought to make a clearer choice between. china is a rising power. it will expect to have more prerogatives. this weighs their problematics for the united states and its allies. we just had a . of call -- i worry about an american drift into an unanticipated confrontation with china because of this ambivalence. we cannot want in a cold war or

get into a competition and might be avoided. we do not want to make the choice. the natural political reaction the united states will be is to kick the can down the road. it is a dangerous way to approach it. it is important to choose the tilt. i worry about the risks that can come. american power is the best critique. i recommended to everyone. i remember the substance of the arguments, even if i forgot the title.

>> i think our policy has been good. it always risks deviating too far in one direction or another because it is trying to strike a perfect al-otari i like to see a man must live in strong and avoid unnecessary fights the obama administration has done a good job with balancing. the individual military pieces of rebalancing our action clematis. in the sense that i think we have very strong allies, for

example, our population, and the openness of the political system. ec in lot of american strings that are enduring. -- you see a lot of american that are enduring. let me give you one concrete example. it is not meant to be an invitation to chinese aggression. if they do something dong -- du mb and try to plant a flg, i cannot think the dark -- the reaction is to help them take it with a new force.

i am not disagreeing with some of the prudent behind this. let's let them hang by their own weight to mobilize international pressure against them as a to the form of sanctions -- in the form of sanctions. let's do it more in direct approach and not necessarily get drawn into a direct confrontation. it has been our strategy for 30 years. it is been generally working. it is getting harder because china is rising in their more powerful. i knocked the requires us to pull back, just to be -- just to be where -- beware. >> i want to link this back to

budgets. paul asid there wasa chnge in environmentitical and forced to relook as systems deemed necessary. the moussa told the. we do not need this kind of helicopter -- then we said we don't need this kind of helicopter or artillery. what are the kind of system we should be investing in? are there vampire programs out there right now that should be cut?

what does this environment me for defense investment? >> can i get m -- i don't want to get my friends in the army mad at me but there is a shift. phrase bob halethe used? that looks like a good prediction today. i think predictions are a very dangerous thing in this business. a does seem to me we need to strengthen our capability. not to contains china. the goal has to be to sustain this situation.

we had a huge interest to the keeping it that way. i do not think we want to see the prices, no matter how silly it might seem. you end up with a choice but king going to war or becoming another nuclear-powered. those are both bad choices. then that would raise a different question. i believe it was the case that when cheney went up for confirmation, it was not mentioned once. whoever is the nominee for secretary of defense, to a country does not have mentioned have them look up.

joking aside, if we think the capability is that needed in the near term, don't base your whole posture on the idea that it will never be needed. one of the things that as happening is we are focusing on the near term at the expense of without further. we had very little ideas i will be more towards the longer-term. >> there are a number of debates we need to have on the subject. lummis are with the category of nuclear weapons modernization -- let me start with the category of nuclear weapons modernization. i do not think we need to be thinking about modernizing all

three legs of the strategic. i am not sure we need to be thinking about modernizing any of them. the need to stay service and state. to me, some marines are fine and up to the department. that's just one example of where you can save money. a more economical approach towards nuclear-weapons. another example, we have these coffee mugs to work for robert hale. that is the way i am and bless my friends at lockheed martin carried. i would size the program

largely to the possible commissions vis a vis china. 35 would being the f- the entirety of the required effort. we should have a debate about long-range bomber. the f-35 program might now will replace structure. >> i agree with most of what they said. i push a little further. towards fortified mobilization base for rapid increases the the capability at a later date,

emphasizing research and development. could provide a minimal, critical mass. >> i'm a retired state department official. i want to complement mike and dick clear opening leg of the land. i want to build on the size of the pentagon. during the cold war, our mortal enemy had the second-largest economy in the world. millions of men under arms, 30,000 plus the lynn weapons, as a threat. are groups of terrorists living

in caves. i did not see how we can spend hundreds of millions more. the pentagon is riddled with fat. it's like kopb beef. why does the enforced a full- fledged symphony? ed a full- force nee d fledged symphony? are there more now in the one everybody was much larger? why did they keep having a larger staff? >> i probably agree with a two- thirds of what he said. i also salute your service.

in the interest of debate, he mentioned a long list of potential areas. the state department should do more of -- the idea of a mid career sabbatical. they teach us a lot of the kodak with some different ideas -- us a lot but they go back with with different ideas. they point to them and career education as important elements of thinking. the ideas they later implement the danda command or one way or another. i would strongly support that. that may be the strongest thing mentioned. regional commanders probably do need their own transportation.

domestic demand is probably did not. and there are a lot of ways to say. the biggest question asked was why the we have to spend so much when our enemies are so much less impressive? the are a lot of things that are still on our plate. there will probably never -- have probably never been more things on our plate simultaneously. we still have six cows and u.s. troops to the afghanistan. we have not talked and talked iran today. i'm not necessarily a supporter of the larger -- of a lot of the level get us there. however express my view that many to hold firm the foundation of western pacific

stability, similar to what paul i. key. if he did not expect, the idea of pulling back as china rises as it is stabilizing position. i'm a general supporter of what the region i would and the wanting to stay where we are and in defense spending. the are specific reforms and savings that can probably save another hundred billion dollars in the tenure defense. >> two comments. it would take some more powerful than the president of the united states to get this done. it would be sensible to take some of that money you talked about from the defense budget

and move it to the state department. you talk about rebalancing. the problem is on capitol hill. when i was at the the the pentagon tried and eventually succeeded, it was difficult to get money out of the budget. that is a place we should try to rebalance resources. on the question of threats, does because the soviets being was bigger did not mean it was more dangerous. during one of those not terribly lightning presidential primary debates we had earlier last year, i think governor . of texas at what he would do if you got that 3:00 a.m. phone call hamas told -- phone call and was told a terrorist attack?

my first, would be i want to know more about who has them -- comment would be i want to know more about who has them. the costs are almost incalculable of terrorist scott i hold of nuclear weapons and set them off. -- got a hold of nuclear weapons and set them off. i come back to my point. american leadership is important for maintaining a relatively peaceful situation we have in

critical parts of the world. we would be very sorry to lose it. once we lost it, then it takes huge costs and blood and treasure to get it back. >> the problem of preventing terrorist from getting access to the first priority for american national security policy. it requires optimizing intelligence and special operations capabilities. it will not be helped that much by the secular changes in personnel costs the are driving the magnitude of the problem. recently general shelton suggested